AIREEN OMAR Chief Executive Officer and Executive Director

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No. of Routes for AirAsia Group

(174160 including AirAsia X) Malaysia AirAsia 82

And the year 2012 was no exception. In a time of economic volatility and uncertainties, we kept expectations and hopes flying high with no let-up on our search for new and exciting destinations. Keeping a pulse on trends, we anticipated and met emerging needs. We increased our footprint in China to cater to growing demand for business travel to and from the world’s most populous country. We went off the beaten track to seek exotic destinations that appeal to adventurous explorers, adding Lombok, Semarang, Surat Thani, Kuming and Nanning to our growing route network. With seven more aircraft, meanwhile, we were also able to increase flight frequencies of popular routes such as those from Kuala Lumpur to Yangon, Hanoi, Vientiane and Yogyakarta.

All the while, as prices around us continued to soar, we bear in mind our promise to the people of Asean and abolished counter check-in fees for international flights. We introduced new services and made existing ones available to more guests, adding to their convenience and comfort. In other words, we got bigger, better and… believe it or not… even more cost-efficient during what was unquestionably another challenging year.

It was, in all, an amazing 12 months, a fitting start to our second decade, and it gives me pleasure to take you through our financial as well as operational milestones.

FINANCIAL PERFORMANCE

Our financial performance orf the year ended 31 December 2012 was very encouraging. AirAsia’s revenue increased by 10% to reach RM4.95 billion, and we managed to achieve a net operating profit of RM729 million. Most spectacularly, we closed the year with a 230% increase in profit after tax of RM1.83 billion as compared to RM555 million in 2011. es, tim ng us t 1.05 llowi to jus a of ced and dend e. edu sheet l divi ar r r ecia er sh e yea balance a sp en p er th th 6 s ov hened rs wi of ring trengt olde ividend gea ch s areh l d a mu l sh y fina Our NETi ng oya inar icat our l ord ind ard and rew are to per sh 18 sen

As always, our financial performance reflected the priority we place on keeping costs down and our constant vigilance on all relevant factors. Other than a spike in staff costs due to bonus accruals and there was a substantial reduction of gain on disposals, our costs across the board remained within expectations. On a year to date basis, AirAsia’s cost per available seat per kilometre (CASK) was 13.80 sen while CASK ex-fuel was at 7.60 sen. Consequently, we achieved the distinction of being the lowest-cost airline in the world.

At the same time, due to an average 6% increase in our fares, as well as growing income from ancillary services, our revenue per available seat per kilometre (RASK) increased increased 1.1% to 17.43 sen. No. of Unique

Our net gearing over the year reduced to just 1.05 times, indicating a much Routes for strengthened balance sheet and allowing us to reward our loyal shareholders AirAsia Group with a special dividend of 18 sen per share and ordinary final dividend of 6 sen per share. As mentioned by our Chairman, we have also announced a dividend policy of 20% of annual net operating profit payout as this increases shareholder certainty, and hence their comfort level, while underlining our commitment not to place capital invested in the Company at risk.

(55 including EXPANDING ALL THE TIME 51 AirAsia X) While others may think we have gone as far as we possibly can, our marked Malaysia expansion during the year proved them wrong. AirAsia as a Group increased AirAsia the number of guests flown from 30 million to 35 million passengers, making us the fourth largest airline in Asia in terms of passengers. We grew our fleet from 97 aircraft at end 2011 to 118 at the end of 2012. From covering 70 destinations via 142 routes in over 17 countries in 2011, we ended year 2012 covering 81 destinations via 160 routes crisscrossing 18 countries. What’s more, 33 no less than 51 of our routes are unique, meaning we have literally created 51 sky bridges to bring people in the region closer together – socially, culturally and economically. 97 ad a Berh AirAsi 98

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These Group figures reflect growth of the Malaysia support further expansion. We were also very In line with our phenomenal growth, the Group has operations too, which, being the flagship AirAsia excited to see both Philippines’ AirAsia and in the pipeline a total of 357 single-aisle aircraft airline and the one that started it all, remains AirAsia Japan launch their inaugural flights and from Airbus – 264 A320 new engine options the biggest and most profitable among all our subsequently grow their networks. In Japan, a (neo) and 93 A320 current engine options (ceo). associate companies. During the year, we flew second hub has already been established in Nagoya These will be delivered in phases up to year 2026, 9% more guests, increased our fleet size from catering to both domestic and international routes with many of the later deliveries replacing our 57 to 64 and expanded our route network to 82. while in the Philippines, there is a possibility of a older aircraft, i.e. those that were acquired in or Though much younger than the national carrier, second hub at the main Ninoy Aquino International soon after 2005. With our last order, placed in we dominate 60% of the domestic travel market Airport in Manila as a result of our associate’s December for 100 aircraft worth US$9.4 billion, and 40% of the international destination market. acquisition of 49% equity in Zest Airways. we are now Airbus’ largest airine customer for the And we are still growing. A320 worldwide. But perhaps most excitingly, AirAsia Bhd has Growth of our associate airlines, meanwhile, entered into a partnership with the Tata Group benefits us by boosting AirAsia Bhd’s bottom line and Bhatia family in India to set up operations in KEEPING COSTS LOW while adding to the connectivity we are able to this vast subcontinent. This promises to create offer our guests. A definite highlight was the listing some exciting synergies with our current five Central to our promise ‘Now everyone can fly’ is of Thai AirAsia at end May 2012, which led to an routes to India, while feeding travellers from India keeping our costs as low as possible so as to pass increase in our net profit for the second quarter, into our extensive Asean network thus increasing on our savings to guests in the form of affordable due to a fair value gain of our remaining 45% equity loads in our other sectors. Detailed discussion and prices. There are two major ways in which we interest. This will continue to contribute positively groundwork are taking place behind the scenes do this – by increasing our cost-efficiencies and to our financial position as this associate is now as I write and we expect AirAsia India to take off by enhancing revenue from our ancillary and able to manage its own capital requirements to before the end of this year. adjacency businesses.

No. of Aircraft for AirAsia Group 123 Airbus A320 Malaysia AirAsia

Airbus66 A320 Guest Per Income Ancillary Per Pax in 40 Malaysia RM Per Pax in Thailand

THB354 Per Pax in Ancillary Business Indonesia

IDR133,009 16%of Total Revenue

We have from the word go been a very IT savvy ANCILLARY & ADJACENCY BUSINESSES AACE serves both our internal pilot training company, leveraging on the latest technologies needs while providing us with additional income to create and maintain a high level of operational In last year’s annual report, we highlighted the by training external pilots. In 2012, we signed a efficiency. In January 2012, we upgraded our IT setting up of a number of joint ventures between five-year contract with CAE through which it will backbone by adopting and going live with merlot. AirAsia and partners with expertise or resources train more than 200 additional new AirAsia A320 aero, a new and cutting-edge airline management that would allow us to monetise our brand and First Officers in a Multi-crew Pilot License (MPL) system that allows us to optimise our aircraft and huge database to create greater and more programme which we developed together to meet crew utilisation. This, in turn, enables us to further profitable synergies. Three such JVs were formed our specific needs. We also set up a new training improve our already healthy on-time performance in 2011: AirAsiaExpedia, a collaboration with the centre in Seletar, Singapore, equipped with two and minimise costs. world’s biggest online travel agent Expedia; the A320 full-flight simulators (FFS) to cater primarily Asian Aviation Centre of Excellence (AACE), a to third-party Airbus aircraft operators. Third- We have also since 2005 (when we replaced our joint venture with Canada-based aviation training party training increased from 10% to 42% during last Boeing B737 aircraft) maintained a high level provider CAE Inc; and BIG, our loyalty programme the year, contributing significantly to AACE’s net of operational efficiency by employing a young launched in partnership with Tune Money. All profit of RM2 million. and therefore fuel-efficient fleet. Last year, we three joint ventures have proven that our carefully were introduced to a new aerodynamic wingtip worked out business models were not flawed. Meanwhile, we enhanced our BIG loyalty design by Airbus, called the Sharklet. This device Each has reported significant growth in revenue programme with additional blue-chip partners is able to reduce the fuel burn and, therefore, in its first full year of operations and is now such as Petronas, Citibank, HSBC, Indosat, DTAC emissions of an aircraft by 4% annually while also contributing to our non-travel related revenue, and Starhub, and saw a more than tripling of allowing an operator either to increase its flight helping to defray travel related costs. its membership during the year to about half a range by 100 nautical miles (185km) or its payload million. The value of this programme is reflected by up to 450kg. Suitably impressed, we became AirAsiaExpedia wasted no time in launching in the fact that it has attracted members from no the first airline in the world to operate an Airbus into some creative marketing and advertising less than 150 countries across the globe, most of aircraft fitted with these Sharklets. As part of campaigns which raised its profile and helped which are not even covered by our route network. our ongoing commitment towards greater fuel- boost income. The company achieved efficiency, moreover, we have specified that all RM3 million in profit, which is being channelled Our ancillary businesses, meanwhile, have newly built aircraft for AirAsia should feature this into further growth. During the year, continued to perform well and provide us with a device. We may even retrofit some of our existing AirAsiaExpedia set up operations in Thailand steady and stable revenue stream, RM40 per guest aircraft with it to further improve our financial and and Malaysia, but has set its sights on further in 2012, which we intend to increase to RM50 by environmental scorecards. expanding its air and hotel supply, and enhancing 2015. its technology infrastructure to increase cost efficiencies. 99 ad a Berh AirAsi 100

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Among our ancillary services, which include in-flight meals, check-in baggage, counter check-in, Pick-a-Seat, Hot Seat selection, Fly-Thru, Red Carpet and various merchandise (on-board as well as in our online Megastore), cargo service is proving to be a real ‘star’, winning numerous regional awards for efficiency, network growth, development strategy, operational performance, customer service and product innovation. Most notably, AirAsia Cargo was named Rising Star Carrier of the Year at the Payload Asia Awards 2012. It also won the Air Cargo Industry Customer Care Award 2012 presented by UK-based publication Air Cargo Week (ACW), for the second consecutive year – the only airline ever to do so. Cargo surprised us despite the cargo market facing a blackhole, posting a tonnage increase of 6.4% year-on-year and load factor of 48%, ahead of the industry average of 45%.

We also extended the hassle-free Fly-Thru service to a larger customer base, making this available to guests flying from Indonesia to China via our Low-Cost Carrier Terminal in Kuala Lumpur; or from Chennai in India to Singapore via Kuala Lumpur.

A NEW DECADE, A ‘NEW’ AIRASIA

In May 2012, we underwent a massive rebranding exercise which served to celebrate two significant milestones – our entry into our second decade, and becoming a truly Asean airline.

After 10 ‘awesome’ years of making our guests’ and our own dreams come true, we felt it was time to recognise our growth while also reinforcing our spirit as an Asean airline with a new and invigorating look. Hence we introduced a more relaxed, sporty yet smart weekend uniform for our flight attendants, while also revamping our counters, office and aircraft to refresh our brand. The key focus is for our guests to connect, discover and experience our products in a way that allows them to fulfil their dreams. New Routes Launched for AirAsia Group

(4843 Malaysia Including Air AirAsia Asia X) 6

as ive, , ect aysia persp Mal a, ean than si As her Indone nei trong s, ot ely ery s rie , nam mar, Bru s a v unt ion Myan ha ine co ociat s, any he n ass m, Lao comp of t ical etna as a one olit e, Vi a ery -p por AirAsi ev his geo Singa fly to to t s, we ong ne bel Philippi that , the iland ia. Tha bod The rebranding was accompanied by ‘awesome’ news such as abolishing Cam counter check-in fees for international flights; allowing guests to save up to and 50% by purchasing their check-in baggage allowance online; and removing fees on certain sports equipment while reducing those for others such as golf sets, bicycles and surf boards. In addition, we increased the choice of dishes on our in-flight menu while offering attractive discounts if guests order these No. of Hubs for online, in advance of boarding their flights. This last measure, while cutting down on costs for guests and ensuring as far as possible that they are able AirAsia Group to enjoy their favourite AirAsia meals when they fly with us, also helps us to reduce food wastage. It is typical of the win-win strategy we employ wherever and whenever possible.

AirAsia as a company has a very strong Asean perspective, as we fly to every one of the nine countries, other than Malaysia, that belong to this geo- political association, namely Indonesia, Thailand, the Philippines, Singapore, Vietnam, Laos, Myanmar, Brunei and Cambodia. Our focus on the region 17 has encouraged greater trade and tourism to these countries and helped in 5 countries tremendously in their socio-economic development. Our associate companies, meanwhile, take the Asean dream even further by contributing in a more direct manner to economic growth of their host nations.

In August 2012, we set up an office in Jakarta to enhance our ASEAN branding and to get our voice heard in ASEAN’s corridors of power, as Jakarta hosts the ASEAN Secretariat and is capital of ASEAN’s largest member state.

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GOING FOR GOLD These qualities have gone a long way towards Aviation Week is clear indication that we have building the value of our brand, and we were managed our values, our operations and our Our Asean flavour is further enriched via the honoured to be ranked 12th among top 30 local finances to the best of any airline’s ability. various regional sporting teams and events that brands in Malaysia’s Most Valuable Brands (MMVB) we endorse, which include the ASEAN Basketball awards, presented by the Association of Accredited League, AirAsia Philippine Patriots (Basketball) Advertising Agents (4As) in collaboration with OUTLOOK and Team AirAsia-Sepang International Circuit-Ajo Interbrand, pioneers of brand valuation. This marks (Moto 3). We do not just provide sponsorships a jump of seven places since the last MMVB study We have got off to a great start for our second for teams and events but also help to nurture was conducted in 2009, with the AirAsia brand decade and are now gearing up to ensure we do future Asean champions in motorsports and, more recording growth of 257.3% since then, the biggest not just maintain the momentum achieved but recently, badminton, via the AirAsia Caterham increase among the 30 listed brands. further accelerate our growth with constant, more Driver Development Programme and the AirAsia closely monitored focus on cost. Competition, Badminton Academy. Our branding as a vibrant, democratic and which is already stiff, will only intensify with the meritocratic organisation has also helped us earn advent of the ASEAN Open Skies in 2015. However, These local and regional initiatives are over and brownie points from the younger generation, and we are confident of being able to leverage on above our high-profile partnership with the we were extremely pleased to have been named our key strengths – the growing independence Caterham F1 (Formula 1) Team, AirAsia Japan & the Most Popular Graduate Employer in Leisure, and profitability of our associates, our low-cost Australia Grands Prix (MotoGP) and the English Travel and Hospitality at Malaysia’s 100 Leading model which will be further enhanced, and our Premier League’s football team Queens Park Graduate Employers 2012 Awards. fast-expanding network connectivity – to grow our Rangers, which ensure we are associated with capacity so as to entrench our market leadership… world-class sporting personalities reflecting our Of course, a strong brand is not built only by clever while maintaining our status as the lowest fare unwavering emphasis on the highest level of marketing; it is the combined result of brand values airline in the region. quality, dedication and professionalism. as well as operational and financial performance. Being named the Top Performing Airline 2012 by

Malaysia Malaysia AirAsia AirAsia

29 International53 Domestic Routes Routes Malaysia AirAsia with more than 5,600 Allstars

In 2013, we will be adding 6 more aircraft – all fitted I would like to assure our guests they are always As to our over 5,600 Allstars, it has been great with Sharklets – to support increasing domestic foremost in our minds, while also thanking them for getting to know all of you better. Having spent and international travel demand in Malaysia. their increasing support and loyalty over the years. more time on the ground, and meeting the entire More routes will be introduced while we also I would also like to thank our Board of Directors for team here in Malaysia, it is clear to me how AirAsia increase frequencies to high-load destinations. their wisdom in guiding us through the many ups has become the World’s Best Low-Cost Carrier and Having significantly improved our cash position, and downs of our exhilarating journey. On a more the Top Performing Airline. The passion, dedication, established exceptional safety practices, and built personal note, I would like to take this opportunity energy and spirit of innovation of every single impeccable brand value, we plan to further expand to express my gratitude to our founders, Tan Sri Dr. Allstar have been pivotal to raising the AirAsia flag our extensive network to take AirAsia, our guests Tony Fernandes and Dato’ Kamarudin Meranun, and and keeping it flying all these years. I have never and Allstars to even greater heights. the rest of the Board for your vote of confidence in been surrounded by such an energised and driven me. With the continued support of my management team who keep us, at management, motivated all We will be preparing for our move to KLIA2 latest colleagues and all our stakeholders, I have every the time. My heartfelt appreciation goes out to in 2014, which will add a new travelling experience intention of fulfilling our shared vision for AirAsia. every single one of you – you are stars in every to our guests. A dedicated airport mainly for LCC single way. travel means having facilities on par with larger international airports and, equally as important, Thank you. having direct train connectivity with downtown Kuala Lumpur. I believe this will spur traffic and contribute in no small measure to our bottom line.

Aireen Omar Chief Executive Officer & Executive Director 105 enang, Expanding Networks.ombok, P Building Bridges.

As we have grown, we have created new routes linking people and places. L Nanning, Tokyo… we’ve connected them all, and more, for you.

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What The Mind Cane’ll help you make your dreams come Conceive, We Can Achieve. Shopping in Bangkok? Trekking in Chiang Mai? Tell us what you want. W true @ airasia.com! ad a Berh AirAsi 112

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Ready, SET100 Company, Go!

ai for Th year he l ch t ptiona whi exce r in y went an e yea onl as s th not the 2012 w It wa ne into top a. d airli ted the AirAsi r-ol apul x of of t-yea o cat e inde ange eigh t als ly th ch c, bu me ock Ex publi x, na he St Inde on t ET100 ies S mpan 100 co and. Thail Ready, SET100 Company, Go! Thai AirAsia

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With its enlarged route No. of Aircraft network, Thai AirAsia ended the year with flights to 30 destinations of which 18 are international. 29 Airbus A320 ad a Berh AirAsi 114

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Business Review Thai Airasia 2012 was an exceptional year for Thai AirAsia. It was special administrative region of the People’s Republic of the year in which the eight-year-old airline not only China. These proved to be immediate hits, attracting high went public, but also catapulted into the SET100 Index, passenger loads and inspiring Thai AirAsia to increase its namely the index of the top 100 companies on the frequency of flights to Chongqing and Wuhan in 2013. Stock Exchange of Thailand. It was the year in which its Bangkok hub returned to its home base at the Don Other than China, Thai AirAsia also strengthened its Asian Mueang International Airport, where it has more space connection with new routes from Bangkok to Chennai, for further expansion. It was the year, moreover, when its the commercial, cultural, economic and educational hub efforts at creating greater inroads into China bore fruit in south India; and to Mandalay, the former royal capital No. of Passengers with the opening of three more routes into this emerging of Myanmar. Domestically, Thai AirAsia carried 4.95 super-economy in north Asia. million guests, an increase of 24.8% from 2011, with new routes that allow both Thais as well as foreign holiday- The country in general enjoyed a relatively stable year makers to fly to popular tourist destinations such as politically, as was reflected in its economic performance. Trang, the gateway to spectacular Thai beaches on the The SET Index ended at 35.8% points higher than a year southwestern front. previously while the national gross domestic product 8.3 (GDP) grew by a healthy 6.4%. Most noticeably, as With its enlarged route network, Thai AirAsia ended million in 2012 the waters of the 2011 floods finally receded, tourist the year with flights to 30 destinations of which 18 are arrivals surged to total 22.3 million over the 12 months, a international. significant 16% higher than in 2011. As of 1 October 2012, Thai AirAsia flights to and from Thai AirAsia itself saw a marked 20.9% increase in number Bangkok landed and departed from Don Mueang, its of guests carried during the year to 8.3 million. This was original hub on the northern reaches of Bangkok. So supported by an increase in its fleet size from 22 Airbus meticulously planned was the transition that no-one aircraft in 2011 to 27. The acquisition of aircraft in itself would have guessed that only the day before the airline was a milestone in Thai AirAsia’s corporate history as, for was operating from Suvarnabhumi Airport located in the first time ever, it was able to purchase these on its Samutprakarn, about 25km east of the capital city. own – not just one in the year, but two. The decision to re-locate was driven primarily The new aircraft were put to work on new routes and to accommodate Thai AirAsia’s expansion plans. increased frequency of existing ones. China, with its Suvarnabhumi, designed with a capacity of 45 million fast-expanding and increasingly global economy, is one passengers a year, was already handling 52.4 million of Thai AirAsia’s target markets. Accordingly, the airline passengers. In comparison, after its closure in 2006 established new routes from Bangkok to Chongqing, and subsequent re-opening in March 2012 following Wuhan and Xi’an, as well as from Chiang Mai to Macau, a renovations, Don Mueang presents itself as a spacious,

More than 2,200 Allstars uncongested alternative; one moreover equipped with all Post-listing, there is no stopping Thai AirAsia. It already the facilities and amenities to facilitate a low-cost carrier has orders for eight new Airbus A320 aircraft to be in managing costs more effectively. delivered in 2013, and with strategic route planning, the airline expects to hit the 10 million guest mark for With the move, Thai AirAsia is confident of being able to the year. Already the No 1 domestic low-cost airline in further enhance its service proposition to valued guests. Thailand, Thai AirAsia aims to dominate all its current The airline already has very impressive key performance domestic destinations while intensifying its focus indicators – with a passenger load factor of 82%, an on potential markets including southern China and increase of two percentage points from 80% in 2011; and Indochina. an on-time performance of 84%. As the airline spreads its wings to cover more destinations and routes, however, As a SET100 company, the future is ready-mapped for it intends to ensure that standards are maintained or Thai AirAsia. A quick look into a crystal ball shows more possibly even heightened. entry points from Asia into Amazing Thailand, as well as a more dense network of routes within the country. With Supporting its operational performance are strong low-cost fares, great service and brilliant connections, financial fundamentals which received a definite fillip in Thai AirAsia is truly set to soar. the year as a result of the IPO. From its listing price of THB3.7 per share, Asia Aviation Public Company Limited (AAV) – the 55% holding company of Thai AirAsia – raised approximately US$230 million, reflecting an oversubscription by a hefty 11 times from international investors. Subsequently, not only does AAV find itself suitably positioned to realise Thai AirAsia’s expansion dreams, it is also in the enviable position of attracting unsolicited proposals by various financial institutions to generate even greater financial synergies.

No doubt these will contribute to even stronger financial scorecards in the near future, bettering the 2012 results which were already very encouraging. Thai AirAsia’s revenue for the year increased 19.8% to THB19.3 billion based on which it achieved a 5.5% growth in profit before tax of THB2.1 billion.

ball International stal cry m Routes a s fro k into oint s Domestic oo ry p , a ck l ent ailand of Routes A qui ore Th work ws m azing net th sho Am se y. Wi a into re den untr Asi a mo e co ce as n th servi i well thi reat a 21 tes wi es, g ions, Th rou t far cos connect oar. low- ant to s rilli y set 15 b rul and a is t 115 AirAsi The World’s Your Oyster. A Vision Comeet it transpose yourTrue. virtual visions into dream

Technology has allowed us to create our low-cost model. L vacations.

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orld to Indonesia Bringing the W

sia , Indone as aside years h ght ular. ng food t ei c lisi n jus ecta - anta e i of sp five T a’s ris ort a ng sh xpected to AirAsinothi ve e er d ha carri ng been oul st i rY. o w w-co he lead unt Wh d lo as t a co r-ol elf r in yea ts rrie lish i l ca estab iona rnat inte orld to Indonesia Bringing the W Indonesia AirAsia

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No. of Aircraft 22 Airbus A320

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eport 2012al R Annu More than No. of Passengers Business Review 1,700 INDONESIA AIRASIA Allstars 5.9 million in 2012

Gourmet cuisine on a low-cost carrier? Yep, QPR’s Indonesian sojourn reflects Indonesia Over and above a conducive environment, believe it. After all, AirAsia delights in serving up AirAsia’s credo to create as many wins as possible however, the team at Indonesia AirAsia has the unexpected. And Indonesia AirAsia, which for the 234 million people in the archipelago. This worked assiduously to overcome intense signed on local celebrity chef Farah Quinn as its it does not just by allowing Indonesians to travel competition by understanding the market’s in-flight meal ambassador in November 2012, the world but, with its global connections as part needs and leveraging on these strategically, is certainly living up to this ideal. With her on of the AirAsia Group, also by bringing the world to providing services that are not only affordable board, guests can now indulge in some of the best Indonesia. but also reflect world-class standards in safety. cuisine the country has to offer. The need for foreign travel was apparent, and is Already there is much taking place in Indonesia. already being catered to successfully. But there Tantalising food aside, Indonesia AirAsia’s rise As the seat of the ASEAN Secretariat, it plays is an equally strong demand for domestic travel, in just eight years has been nothing short of host to various regional activities. Economically, and the airline is now focusing more intently on spectacular. Who would have expected a five- the country is growing from strength to strength, growing this sector. year-old low-cost carrier to establish itself as the its gross domestic product (GDP) expanding by leading international carrier in a country where the 6.23% in 2012, according to Indonesia Central During the year, Indonesia AirAsia introduced 12 airline industry is a hotbed of competition? Not Statistics Agency. In its quest to be the leading new routes. Of these, 11 were internal: Bandung only did Indonesia AirAsia achieve this distinction, low-cost carrier in the country, Indonesia AirAsia – Pekanbaru, Jakarta – Semarang, Denpasar it has continued to acquire more market space both supports and further promotes this growth, – Yogyakarta, Denpasar – Surabaya, Medan – and today accounts for 40% of Indonesia’s encouraging greater trade between Indonesia and Pekanbaru, Medan – Banda Aceh, Surabaya international passenger traffic, with an extensive the rest of the world while facilitating business – Bandung, Surabaya – Jakarta, Surabaya – route network connecting the country with 18 travel and tourism. Semarang, Makassar – Jakarta and Makassar - destinations in Asean and Australia. Balikpapan. Further strengthening its domestic The total number of guests carried by the airline route infrastructure, Indonesia AirAsia opened its Among the over 3.7 million international guests in 2012 increased 17% to reach 5.85 million, sixth hub in the country in Makassar, the provincial carried into the country in 2012, were members supported by various factors: the country’s vast capital of South Sulawesi. This adds to the other of the Queens Park Rangers, who flew in to play population, its archipelagic geography, escalating hubs in Jakarta, Bali, Medan, Surabaya and against local team Persebaya on 23 July 2012. wealth of the people (as reflected in growth of Bandung, each serving to bring the airline closer Although the R’s won 2-1, the entire friendly was its gross national income per capita based on to the people. The hub network further reduces a win for Indonesia. It was the first time QPR was purchasing power parity (from US$2,120 in 2000 Indonesia AirAsia’s dependence on the Soekarno- visiting the country. It was the first time 55,000 to US$4,500 in 2011), increasing tourism as well as Hatta International Airport in Jakarta, which is Indonesian football fans got to watch live the business-related travel. showing signs of having reached full capacity. Premier league team play their local favourites. Concerted efforts to enhance its domestic is expected to unfold before end 2013. The IPO will network have led to a more even spread of further boost the airline’s finances and provide the domestic and international destinations, from a funding for greater expansion both domestically 30:70 domestic to international ratio to an almost and internationally to meet increasing demand. equal 10:11 ratio. In real numbers, Indonesia AirAsia Meanwhile, the team at Indonesia AirAsia is also serves 18 domestic and 20 international routes. fast expanding, and to accommodate the growing Domestic numbers, the airline will be moving to a larger new On the international front, Indonesia AirAsia home in December 2013 which promises to offer a Routes launched the Surabaya - Johor Bahru route on state-of-the-art work environment that will include 19 October 2012, the inaugural flight taking off training rooms, a roof top lounge, cafeteria, with a load of more than 90%. In addition, it auditorium, games room and a large parking area. increased its flight frequency of popular routes such as Medan - Penang and Medan – Bangkok which now enjoy 24 and seven flights a week, At the same time, the airline is investing more into respectively. brand awareness in Indonesia, especially to access 18 large untapped populations outside the main Route expansion was accompanied by the cities. Despite a high internet sales penetration of addition of five more aircraft to Indonesia over 75%, the take-up has been more from high- AirAsia’s fleet, bringing the total at year end to density trunk routes which we believe serve the International 22. Significantly, 2012 marked the year in which above-average income bracket who have access Routes the airline celebrated a 100% Airbus fleet, a to internet and credit cards. In October 2012, the milestone Indonesia AirAsia celebrated with company added new sales channels via travel special promotions. With its all-new, all-Airbus agents throughout Indonesia, focusing primarily fleet, the airline is set to further enhance its cost on secondary towns such as Jabodetabek, and operational efficiencies, which are already Bandung, Surabaya, Aceh, Medan, Pekanbaru and very encouraging. In 2012, despite increasing its Makassar. This will allow the mass population to fleet size and number of flights, Indonesia AirAsia purchase tickets in person, using cash, translating 20 maintained a passenger load factor of 77% and into a higher load factor while increasing the increased its revenue 17% to IDR4,383 billion while airline’s 3% 2012 domestic market share. netting an 129% increase in profit to IDR142 billion. Internationally, the team will focus on expanding Indonesia AirAsia’s route network to take the The year’s sterling performance was reflected Asean airline into wider Asian territory. As it does, by Indonesia AirAsia being named the Foreign it will place equal emphasis on safety, which is Airline of the Year and Foreign Airline of the part of the AirAsia brand promise – to deliver Year – Southeast Asia Sector by Malaysia Airports dreams safely. at its KLIA Awards. The awards recognise the contributions of airlines towards increasing In other words, 2012 was a great year, but 2013 passenger movement at KLIA and their service will be even better. As Indonesia establishes its performance. Strong links between Indonesia presence more firmly in the region and beyond, AirAsia with Malaysia has led to Malaysia being Indonesia AirAsia will be there every step of the one of the top destinations for Indonesians way. At the same time, as more people of the travelling abroad. world dream of visiting this fascinating country, the airline will ensure they get to do so, and get to Having emerged from a successful year, Indonesia enjoy the country’s full flavours too. AirAsia is now moving full steam ahead as it prepares for its initial public offering (IPO) which sia Indone , r. As bette beyond ven and he be e egion . At t the r way this 2013 will y in the ting , but firml p of visi so r, re y ste m of to do yea mo ever rea get great sence ere d d hey as a e th worl e t s its pr be the ensur too. 2012 w e a will e of urs tablish eopl ne will lavo es sia AirAsi re p airli f s mo , the ’s full Indone e, a ntry ntry e tim cou cou sam ing the cinat joy fas to en get and

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A New Decade. A New Beginning. With the strength of 11 awesome years behind us, we’re raring to enter the next decade and more. Of course, we’re not about to leave you behind. So book your flight, pack up you camera, and let’s have a jolly jeepney ride! ad a Berh AirAsi 124

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Philippines’ AirAsia Takes Off

Philippines’

ing AirAsiar be afte hs as w mont a w a fe nto t nes’ AirAsims i cost So, jus drea ow- , Philippi ing t l tiful born urn e firs u t th his bea s, lready is not in t and a . It rate lity ope e 7,000 isl air rea r to som ising rrie of ion ay ca lago olut he w hipe ev in t arc till r ntry t is s cou w. but i the o el in nows h trav a k AirAsi only Philippines’ AirAsia Takes Off

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No. of Aircraft 2 Airbus A320

Having a low-cost carrier bring in millions of Filipinos and foreign visitors to Clark every year would certainly help in this regard. ad a Berh AirAsi 126

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sia Business Review Philippines’ AirA

all ely sm lativ force a re a and lready raft is a airc a s’ AirAsi bus A320 ne Air hilippi two rs, P only ta ith h. W of 203 Alls wit m koned tea rec to be

Clark International Airport in Pampanga was set up expressly to take some of the pressure off the Philippines’ main international gateway, Ninoy Aquino International Airport (NAIA) in Manila. Until recently, however, passenger Domestic arrivals and departures at Clark were nothing to shout about. Then, last year, Routes this second airport some 80 kilometres away from the capital city, suddenly International woke up. Passenger arrivals shot up from 0.767 million in 2011 to 1.3 million. Routes About 28% of that increase came from just one airline: Philippines’ AirAsia. It was the Aquino administration that had the foresight to advise the management of Philippines’ AirAsia to set up base at Clark. This decision is today providing some much appreciated relief to Filipinos frustrated 2 with the congestion at NAIA. More than that, it is also helping to develop the Pampanga region and other areas in the vicinity including Central and 4 Northern Luzon. The Pampanga Chamber of Commerce and Industry Inc has identified tourism as a potential key driver of further economic development of the region noted for its specialty cuisine. Having a low-cost carrier bring in millions of Filipinos and foreign visitors to Clark every year would certainly help in this regard. No. of Passengers 0.31 million in 2012

More than 200 Allstars

The set-up of Philippines’ AirAsia seems to have is not the first low-cost carrier to operate in this for more than half of the total domestic passenger come at an opportune time in more ways than beautiful archipelago of some 7,000 islands, but it volume at Clark International Airport. Meanwhile, one. In the months preceding its official opening, is still revolutionising air travel in the country in the just five months into international operations, it there were increasing calls from the people for the way only AirAsia knows how. had accounted for almost 10% of all international government to tighten its regulations on low-cost passengers at Clark. Operationally, too, the airline carrier practices. In particular, passengers wanted Philippines’ AirAsia launched its pioneering routes is maintaining high AirAsia standards, averaging an greater transparency in the fee structure of airline – to Davao, an important gateway to Mindanao; on-time performance of 87.8% with a record high of tickets. and Kalibo (Boracay), well known internationally 97.9% in June. for its stunning beaches – on 28 March 2012. Philippines’ AirAsia saw this as a great opportunity Flight PQ7001 to Kalibo was the first to depart, Although 2012 was by all accounts a good year, the to promote itself as not only a low-fare carrier, but at 7.00am. It was a special flight in more ways team in Clark is confident of an even better 2013 also one that values the customer experience at than one. Among the 143 guests on board were and beyond, as a result of its own efforts as well as all points of the journey – from the purchase of 18 children with hearing impairment and Down’s government initiatives. The government recently a ticket to leaving the airport at the destination. Syndrome, who were flying for the first time on an significantly reduced international passenger A good customer experience means no hidden educational trip – gratis – accompanied by their terminal fees at the airport and improved its bus surprises, especially not in fees. Hence when the parents and teachers. This flight set the tone for connectivity by adding a new service from Trinoma airline launched its first flights with a promotion the future of the airline as one that takes seriously Mall in Quezon City to Clark on top of those from that offered 20,000 ‘free seats’, it spelt out its commitment to serving the people, and Metro Manila’s Pasay Terminal and SM Megamall. clearly that guests would still have to pay for especially the under-served. fuel surcharge, processing fees and government Internally, the management has set targets for mandated fees such as aviation security fee and Four months into operations and Philippines’ year 2013. It is keen to establish a presence in VAT, amounting to about 275 peso. It gave a name AirAsia granted the wishes of its guests who were Metro Manila via a strategic alliance with Zest to its price transparency – the ‘all-in’ fare. The clamouring for more. In April 2012, it launched Airways, in which AirAsia acquired a 49% stake on people were delighted. Within 72 hours of the flights to Kuala Lumpur, supplementing the 11 March 2013. There is still a huge market to be promo being launched, all seats had been snapped Kuala Lumpur-Clark route that was already being tapped in the Philippines, and Philippines’ AirAsia up, and guests were clamouring for more – more operated by AirAsia. In July, it added Hong Kong is committed to leveraging on this by continuing to tickets and more routes. and Macau to its network, and in December – as a make Filipinos’ dreams come true with new routes, year-end present to its fans – Philippines’ AirAsia affordable fares and exciting promotions. Soon after, the Philippine Civil Aeronautics Board introduced two more destinations: Taipei and (CAB) stepped in to make it a requirement for all Singapore. Best of all, it aims to do all of this in true AirAsia local carriers to disclose all charges applicable to style – transparently, efficiently and with value- promo fares. With only two Airbus A320 aircraft and a relatively added service. small team of 203 Allstars, Philippines’ AirAsia So, just a few months after being born, Philippines’ is already a force to be reckoned with. In 2012, it AirAsia was already turning dreams into reality. It carried a total of 311,000 guests and accounted 127 No Mountain’s Tooe dream the impossible High. and make No Dream Too Distant.

Our journey has never been easy, but we are guided by a can-do philosophy. W it your reality.

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Rising, Like the Sun

il ts unt ligh le f d not rdab coul st affo y co of e simpl low- uld rved anes ire co Sta e Jap he ent they a’ th of t . All gaish 2012, gh pt enou conce su kōkū le get LCC) akuya sonab er ( as ‘k ea carri t w s ‘r abou y mean talk rall h lite CC’. whic or ‘L nes’ airli Rising, Like the Sun AirAsia Japan

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No. of Aircraft

Airbus4 A320

AirAsia Japan will play a significant role in this new expansion strategy. Much focus will therefore be trained on the airline, which will provide an extra lift for this new AirAsia affiliate to soar. ad a Berh AirAsi 132

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Business Reviewsia 300 JAPAN AirA 0.25 Allstars million in 2012

If anyone had any doubts about how low-cost travel AirAsia Japan, a joint venture between AirAsia towards further development of tourism in the would catch on in Japan, word on the street would and Japan’s largest airline, All Nippon Airways country. Japan in 2012 won UK-based Wanderlust have put their misapprehension to rest. Starved (ANA), was established in July 2011. A year later, magazine’s top award for the country its readers of affordable flights until 2012, the Japanese on 1 August 2012, the new airline with unbeatable most wanted to visit, and attracted a total of 8.37 simply could not get enough of the entire low-cost pedigree launched its inaugural flights to Fukuoka million foreign visitors who accounted for a 37% carrier (LCC) concept. All they could talk about – a harbour city and capital of Kyushu in the south; increase in revenue from international tourism, was ‘kakuyasu kōkūgaisha’ which literally means and Sapporo – the capital of Hokkaido, famous for according to the United Nations World Tourism ‘reasonable airlines’ or ‘LCC’. The term even made hosting the 1972 Winter Olympics, in the north. Organization (UNWTO). it as a top 10 buzzword in the country in 2012, Flight JW8541 to Fukuoka took off from Narita according to publisher Jiyu Kokuminsha. International Airport at 7.00am sharp with a load Increasingly more tourists from Asean are visiting of 80%, followed by flight JW8521 to Sapporo 15 this culturally and historically rich nation, with As a result of the government’s desire to stimulate minutes later, with a load of 87%. Later the same about 775,000 visitors – or a tenth of total foreign the domestic air travel market, which is the third month, AirAsia Japan launched its third route, from visitors in 2012 – coming from the six Asean nations largest in the world, more landing slots were made Tokyo to Okinawa, at the southernmost part of the of Indonesia, Malaysia, the Philippines, Singapore, available at airports and there is a move towards country. Thailand and Vietnam. It helps that Japan has close lowering landing fees. These have been positive political, trade and cultural ties with the region. changes for low-cost carriers such as AirAsia Japan. Boasting fares that can be lower than those of the The year 2013 marks the 40th anniversary of In fact, it is not the only LCC to set up in the Land Shinkansen, Japan’s famous bullet trains (which ASEAN-Japan relations, which have been further of the Rising Sun, nor even the first to do so. Two are also infamously expensive), AirAsia Japan’s strengthened by the appointment in July 2010 of other airlines beat it to launching the country’s first domestic routes are bound to attract high guest a dedicated Japanese ambassador to the region. LCC flights by just a few months. However, with a loads. Adding to the attraction of LCC travel from Japan is the first country outside of Asean to create population of more than 127 million – making it the Narita International Airport, AirAsia Japan was such a diplomatic post. world’s 10th most populated nation – and boasting instrumental in setting up a low-fare Tokyo Shuttle the third largest economy in the world with a highway service between the airport and Tokyo Trade between Japan and Asean, meanwhile, has GDP per capita (in 2011) of US$39,578, equivalent Station, beginning on July 3. grown steadily following the set-up of the ASEAN- to 320% of the world’s average, there is definitely Japan Centre in 1981. Between 2010 and 2011, enough disposable income… and appetite… for The airline’s blueprint, however, is not just to cater bilateral trade increased by 32.3% from US$206.6 three, or even more, low-cost carriers. to domestic travel needs, but also to serve the more billion to US$273.3 billion, and Japan moved up expansive yen for overseas travel of the Japanese. from being Asean’s third largest export destination International flights, moreover, would contribute to its top export destination. While Asean exports to Japan increased by 43.3% amounting to US$147.4 billion, outbound and domestic travel is expected to increase imports from Japan grew by 21.4% totalling US$125.9 significantly in 2013 – with a 7.9% increase in number billion. Japan maintained its position as Asean’s second of foreign travellers to the country to a record high of largest trading partner after China. 8.9 million; a more moderate yet sizeable 1.5% increase in number of Japanese (totaling 18.7 million) travelling AirAsia Japan made a start in its international service from overseas; and a 0.3% increase in domestic travel, which Narita International Airport with two destinations in Korea. will see 287 million domestic trips. Daily flights to Seoul (Incheon) began on 28 October, while those to Busan commenced on 28 November. More routes To leverage on the expected growth in air travel, AirAsia are in the offing. Japan will receive more new Airbus A320 aircraft in 2013 and will be enhancing its campaigns to boost its load AirAsia has great hopes for our Japan affiliate, which factor. Along with further cost reductions and operational represents our first operation outside of Asean, and which efficiencies, it also expects to bolster its profits. So the opens up the entire North Asia region – encompassing future is looking bright in the Land of the Rising Sun and Japan, Korea and China – to us. We believe there is much if all goes according to plan, as it should, we may just potential for further growth of low-cost travel in this create another new buzzword – not just any ‘LCC’, but the vast and largely underserved area, and have appointed a best one there is – ‘AirAsia Japan’. Chief Executive Officer to look into developing our newly created target market.

AirAsia Japan will play a significant role in this new expansion strategy. Much focus will therefore be trained on the airline, which will provide an extra lift for this new AirAsia affiliate to soar. Industry forecasts are already very positive. According to JTB Corporation, one of the largest travel agencies in Japan and the world, inbound,

the of e Land as it n th an, d – ht i to pl or brig ing uzzw a king rd w b si oo acco er ne e is l s h re is – ‘AirA utur all goe anot the he f if reate one So t n and t c best Su ay jus the Rising e m but uld, w ‘LCC’, sho any Domestic just Routes International not ’. Japan 4 Routes 2 133 ad a Berh AirAsi 134

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Xceeding Expectations

ring , soa ence urbul a X mic t ces, AirAsir in l econoel pri yea ’. It globa et fu rling ppen t- te gh j te s ha cos Despi hi her s hing sed s and anot t rea ent taxe yet ‘made nc xcell r ved lly work, i ng e yea hie it rea net eri ifth ac en ute deliv ts f y ts ro on i ll 2012 wh i used ended menta ligned foc thus unda rea ies, and re f ts full icienc ce mo sh i eff r servi r and nlea me to u custo tronge iting r, s t wa a bette ne jus t airli fi ial. potent Xceeding Expectations AirAsia X

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Business Review AirASIA X

Despite global economic turbulence, soaring taxes and high jet fuel prices, AirAsia X achieved yet 12 Airbus A330 another sterling year in 2012 when it really ‘made things happen’. It realigned its route network, increased cost-efficiencies, focused on delivering excellent customer service and thus ended its fifth year a better, stronger and more fundamentally fit airline just waiting to unleash its full potential.

AirAsia’s long-haul sister airline provides bridges Although the route rationalisation led to a between the Asean region and its neighbours. decrease in number of destinations served by Combining Asean with just Northeast Asia throws AirAsia X from 16 to 12, the popularity of its Maintaining a low cost per average seat kilometre open a target market of more than 2 billion existing routes meant an overall increase in the of 3.74 US cents, AirAsia X has been raising public people, comprising around one-third of the passenger load factor from 80% in 2011 to 84%, awareness via marketing campaigns, high-profile world’s population. This key advantage is not lost with the total number of guests carried growing sponsorships and brand promotions of its main on the airline, which has been acknowledged by from 2.53 million to 2.58 million. value proposition that people can now fly further Skytrax as one of Asia’s best low-cost carriers. and at cheaper prices than those offered by full AirAsia X hauled in revenue of RM1.97 billion in AirAsia X also maintained a very high level of service carriers. Its tagline ‘Now Everyone Can 2012, an increase of RM105 million from 2011. It operational efficiency as reflected in several Fly Xtra Long!’ underlines its mission to be the also reduced its total expenses by RM4 million key performance indicators, and another award, foremost low-cost, long-haul airline globally. to RM1.92 billion, managing to turnaround a loss this time the Airbus Top Operational Excellence of RM97 million in 2011 to a net profit of RM34 Award 2010-2011 for its operating, maintenance The airline’s impending initial public offering (IPO) million. and safety systems. Aircraft utilisation, which was in 2013 will go a long way towards realising this already a world high according to the SAP Group mission, as it will provide the funds for further A major contributor to its impressive financial (Strategic Airport Planning Ltd) at 15.8 hours per expansion. Already, AirAsia X has placed an order showing was a shake-up of the AirAsia X route day in 2011, further increased to 16.2 hours per day for 24 Airbus A330-300 aircraft, which are to be network. During the year, AirAsia X suspended – a good 45% higher than the average Asia-based delivered in phases between 2013 and 2017, and routes to Europe (London, Paris), India (Delhi, full service carrier. This was supported by very once delivered will almost triple the current fleet Mumbai), New Zealand (Christchurch) and Tehran commendable on-time performance of 85%. of 11 aircraft. With more carriers, the airline will for a combination of reasons including high have the capacity to spread its wings further and airport taxes and handling charges, imposition While the airline’s revenue passenger km (RPK) wider across the Asia-Pacific, making even more of the European Union Emission Trading System, dropped marginally to RM13,601, its ancillary dreams of travel come true. depressed leisure travel from certain markets, visa spend per pax increased substantially from RM123 requirements for certain nationalities and local to RM142, due to its making available a suite of While soaring to greater heights, AirAsia X will be currency volatility. value-add services. AirAsia X is one of the first supported by better ground infrastructure and low-cost, long-haul carriers globally to install a facilities upon its move, along with the rest of At the same time, the airline was able to flat-bed seating class, introduce tiered baggage AirAsia, to the new low-cost carrier terminal KLIA concentrate more fully on its core markets of fees, provide in-flight entertainment, and offer 2. From this secure home base, where it will enjoy Australia, China, Taiwan, Japan and Korea where pre-booked food as well as seat selection options. enhanced feeder traffic for better connectivity it has gradually built stable, profitable routes It also pioneered the Fly-Thru service in the low- within the AirAsia Group, it will also be exploring within local infrastructures that support low-cost cost carrier market, which allows for seamless the possibility of setting up new operational hubs services. Its launch of the Kuala Lumpur-Haneda connection without having to obtain a visa when beyond Kuala Lumpur in locations where there route in 2011 won the Best New Route Launch transiting at the Low-Cost Carrier Terminal already exist strong AirAsia short-haul hubs. at the 2012 Budgies & Travel Awards held in (LCCT) in Kuala Lumpur to other AirAsia Group London in 2012 for excellent profitability and a destinations outside Malaysia. In 2012, it added to So the year 2013 promises to be very exciting, and unique and innovative approach to partnerships its already impressive range of ancillary services AirAsia X is all geared to share this excitement and negotiations. Applying the same innovative the option of booking all three seats in a row for a with its loyal guests, allowing them to go places approach, AirAsia X in 2012 introduced routes nominal fee under yet another new service, called with the airline as they enjoy the best service and from Kuala Lumpur to Beijing and Shanghai in Empty Seat Option. the best flying experience… at the lowest priced China. A real coup, however, was getting the tickets money can buy. green light from the Malaysian Government, after years of lobbying, to fly to Sydney. AirAsia X now has seven flights a week to Australia’s most populous city, which enjoy almost full loads. a X AirAsi ts, , and gues iting oyal y exc ts l enjoy ver th i hey be wi as t e es to tement ne at th omis exci e airli … this h th rience r 2013 pr are t expe e yea sh aces wi ing th ed to pl t fly So r to go bes buy. all gea hem the can is t and owing ce oney all servi kets m best tic the ced est pri low

No. of Passengers 2.58 million in 2012

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Business Review BIG Loyalty programme Now Everyone Can be a BIG Shot

When the million free seats promo comes round, as Medical Group in Singapore earns 15 BIG Points, from no less than 150 countries across the world, it does every year, most AirAsia fans will spiral into just as an example. which cover a span even greater than the AirAsia a frenzied jostle with millions of others on virtual destination network. space, trying to book their dream tickets before BIG Shots earn their points from the purchase these get sold out. But not the BIG Shots. These of tickets and/or ancillary services on any flight Members may redeem their points in full or through privileged members of our loyalty programme operated by an AirAsia Group carrier; or when they a cash top-up for flights on any AirAsia Group get priority treatment during every AirAsia sale book hotel stays, travel packages or car rentals member. The number of points required to redeem and promotion. They also receive special low from AirAsia subsidiaries such as Tune Hotels and a seat depends on the chosen route and the redemption deals every fortnight, and get to AirAsiaExpedia. They also accumulate points by number of seats available on the particular flight. enjoy fixed redemption rates for popular routes making purchases from AirAsia Megastore, BIG’s Alternatively, BIG Shots may redeem their points that can be achieved twice as fast as with loyalty own online shopping mall, ShopBIG, which boasts for AirAsia gift vouchers, AirAsia merchandise, or programmes at legacy airlines. over 1,000 cross-border global merchants, and at for free stays at Tune Hotels around the world. the more than 3,000 retail partners around the In other words, our BIG Shots get spoilt… big time. world including Metrojaya, Sogo, Petronas and Avis. This loyalty programme serves both to reward BIG is like a dream merchant, making the travel frequent fliers on AirAsia while enabling us to dreams of its members come true. No wonder, Perhaps most appealingly, BIG Shots also get to increase our load factor and earn additional then, that in 2012, the second year of its existence, earn points at millions of Visa merchants worldwide revenue from the sale of points to our financial and the number of AirAsia fans signing on to the (BIG’s financial partners) with the BIG VISA Prepaid retail partners. Revenue from the BIG programme programme led to a more than 200% growth in card. This service is offered in partnership with 21 for the year 2012 was RM3 million, and we expect membership, from 150,000 BIG Shots at end 2011 credit card partners that include Citibank, Standard this to increase by more than 500% in 2013. At the to half a million. This was due to word of mouth Chartered, Alliance Bank and RHB in Malaysia, eight same time, we are looking at a 2% increase in load endorsement as well as concerted efforts of the banks each in Indonesia and Thailand and one in factor from the redemption of points in the near team to communicate the benefits of the loyalty Brunei. No less than RM85 million was spent on BIG future. programme, coupled with attractive fortnightly and VISA Prepaid cards in 2012. quarterly campaigns. Having already tripled our membership from end During the year, the BIG team managed to sign 2011 to 2012, we are pulling out all the stops to No doubt, the introduction in August 2012 of free on a number of new blue chip partners that add quadruple the number of BIG Shots in 2013 as we membership also served to bring in the numbers, greater prestige to the programme, including roll out more campaigns to better communicate especially as the drive was held in conjunction with financial partners HSBC, Bank Mandiri and BNI, and the benefits of this programme. BIG is big on value a promo offering flights from Kuala Lumpur to leading telcos Indosat, DTAC and Starhub. and its members will be the first to agree that they Bali, Perth or Osaka, or Bangkok to Phnom Penh, are, within the realm of dreams turning into reality, or Jakarta to Kuala Lumpur from as low as 10 BIG The appeal of such a loyalty programme is evident the biggest winners! Points. And what does it take to get 10 BIG Points? not only in the sheer numbers, but also in our Not much, really. Every S$1 spent at the Healthway membership profile. Tellingly, our BIG Shots come > Wallpaper > Casa Del Mar > Livingetc Malaysia > The Lakehouse Thailand > SSP Thailand > Swing > Hard Rock Hotel > Hard Rock Hotel > Prestige > Tune Hotels > AVIS > Kbank Credit Card > Krungthai Panic > Topgear > TuneTalk > Budget > DTAC Insurance > Saphalpae > CIMB Bank > Hertz > The 1 card > Budget > Verztec > Petronas > Alpha Specialist Centre > SCB > Avis > Booska.com > RHB Investment Bank > Answers-In-Law > Bangkok Bank > Hertz > Zalora Thailand > Alliance Bank > Citibank > Garmin > King Power > RHB Bank > KTC > Bazaar > Concorde Hotel > Diners Club > Hair > Casa Del Rio > TMB > Lonely Planet > Thanachart Credit Card Singapore > WorldCard Indonesia > Rihiveli > SSP Singapore Indonesia > Poetre > Gili Lankanfushi > Avis > Black Canyon > Tune Hotels > Hilton HHonors > Tune Hotels > Hertz > Mandiri > Budget > Hard Rock Hotel > Healthway Medical > BRI Touch > Avis > HSBC Group > BNI Credit Card > Hertz > AVIS > Concorde Hotel > CIMB Niaga > KidZania > StarHub > Indosat

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Business Review AirAsiaExpediaith Us Travel Away and Bed W

rch 2012, Ma w- ds end llo war ye s to into day ed t and ee ere lur ligh r thr s w day eir Fo ean oad e th por n br hav Singa s – i to ance bed s – a ch eeted place sh blic stand island ry pu … and the d in ve ken s in coul es ta l stay rists r ctur ote oto bette pi ree h a, m r a s n f laysi fo rd wi Ma erate illboa to c. In l ay b em bli to dece hw th repu but hig ning elp ching ar h -cat ow – w not eye yell ead”. k at ry s ah loo cana day in in oli – aga WN, h OW DO to “SL ith Us For three days towards end March 2012, Meanwhile, AirAsiaGo, which caters specifically Park. This partnership gives Expedia access to AirAsiaExpedia Singaporeans were lured into yellow-sheeted to AirAsia brand loyalists, received a facelift. Its over 2,500 professional football matches, with an beds – in broad daylight and in very public booking platform was revamped to offer a more estimated cumulative global TV audience in excess places – to have their pictures taken… and stand user-friendly guest interface aimed at increasing of five billion. a chance to win free hotel stays in the island conversion rates. After the new-look site was republic. In Malaysia, motorists could not help but launched on 27 July 2012, there was an immediate The young and dynamic team’s innovative Travel Away and Bed W to decelerate for a better look at eye-catching increase of 20% in bookings within a week. The marketing and customer service did not go highway billboards – again in canary yellow – revamp was completed on 14 November 2012. unnoticed. In October, Expedia was named the warning them to “SLOW DOWN, holidays ahead”. Best Online Travel Agent for the third year running With its young and vibrant team that ‘gets’ at the 23rd Annual TTG Awards 2012. This award, These were just some of the cheeky and the online market, AirAsiaExpedia managed presented by TTG Publishing, is based on voting fun advertisements and campaigns run by to increase the number of its online sales by industry professionals such as hoteliers, airline AirAsiaExpedia during the year to create greater transactions to 1.3 million from 0.8 million in staff, car rental companies, cruise operators, brand awareness and draw more visitors to its 2012 , increasing revenue of each point of sales national tourism organisations, as well as websites. And the efforts were not in vain. Expedia by double or triple digits. Online transactions readers of TTG publications. TTG cited Expedia’s Singapore saw a 48% increase in the number of for flights grew significantly by 123% while that professionalism, value-added service and use of fans on its Facebook page, and a 26% increase in for hotels improved by 64%. Accordingly, the technology as key factors leading to its win. sales revenue from its online site at expedia.com. company achieved a healthy gross profit margin sg. The Get in Bed Facebook contest application of 71% in 2012, which has been reinvested into Expedia also won the Budgies and Travel Awards accumulated a total of 10,182 unique visits, 1,795 marketing its presence and setting up new 2012 for best Online Travel Agent. These awards registrations and 255 photo submissions. infrastructure in new markets to facilitate long- were created to recognise leaders, innovators, term growth. creative talents and pioneers in Asia’s low-cost There can be no doubt about it: this joint venture airline industry. (JV) that brings together two highly successful, Needless to say, these figures are just the ‘dream’ brands – AirAsia, the world’s best low-cost beginning of even better things to come. As with Having accomplished much in its first full airline; and Expedia, the world’s largest online all AirAsia businesses, one of AirAsiaExpedia’s key year, the future is certainly looking bright travel agent (OTA) – is melding two organisations selling points is the value proposition it offers to for AirAsiaExpedia. Already, the company with very similar cultures and mindsets to create customers. All of its deals are backed by a Best is intensifying its marketing and branding some amazing synergies. If anything can make Price Guarantee; in other words, if guests find a campaigns, further expanding its air and things happen, this combination certainly will. better price online for the exact trip, Expedia will hotel supply, and enhancing its technology match the lower rate and even award the guest a infrastructure to increase cost efficiencies. As it AirAsiaExpedia, established in 2011, operates travel voucher. entered the year 2013, moreover, the team was Expedia’s branded businesses in Japan, India, strengthened by a key new appointment that sees Southeast Asia and other East Asian markets, Like AirAsia, too, this adjacent business keeps Kathleen Tan, previously AirAsia’s Group Head as well as AirAsia’s AirAsiaGo and GoRooms its fans interested with attractive promotions of Commercial, take over the position of Chief businesses. It also has exclusive online third-party and brand-building initiatives. In October, the Executive Officer. distribution rights in the region for AirAsia and Singapore-based operations celebrated its first AirAsia X flights and travel packages. This means anniversary by offering trips for S$1 every day over Kathleen was responsible for growing AirAsia’s that save for a few exceptions, the only place to a period of two weeks. A month later, it had the presence in China. Her ability to cut through the find and book AirAsia flights online is on AirAsia. occasion to celebrate its sixth anniversary in Japan social media of clutter of China with Sina Weibo, com, AirAsiaGo.com and Expedia. and did so in style, giving vacationers a whopping as well as her passion and commitment led to 99% discount on their travel plans. being named Web in Travel’s (WIT) Marketer of In 2012, its first full year of operations, despite the Year in 2012. Given her unique style of brand- macroeconomic issues and political tensions Internationally, Expedia signed on to become building, sales and profit growth, the Group is between Japan and China as well as Japan and the official sponsor of the Professional Game confident of AirAsiaExpedia making tremendous Korea impacting travel demand, the company Match Officials Limited (PGMO), an association of progress in the next phase of its expansion literally soared. Its expansion into Thailand was professional football referees in the UK. Under the trajectory. marked by the unveiling of an AirAsia aircraft in agreement, match officials will bear the Expedia full Expedia livery, creating a first for the company logo on the shirts at the Barclays Premier League, as the only OTA with its own plane. Malaysia npower Football League, FA Cup with Budweiser, Expedia was also established, offering the full Capital One Cup and other domestic professional suite of services including air tickets, hotels and matches. The one-year sponsorship kicked off on custom-made travel packages. 12 August 2012 at the Community Shield at Villa 143

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Business Review Asian Aviation Centre ofaying Excellence Off Pilot Project P

Every year, about 50 young cadets emerge from our fleet and augmented our flight frequencies, The AACE, the first joint venture of its kinds the Asian Aviation Centre of Excellence (AACE) in however, we realised that our requirement for in Asean, opened with six CAE-built full-flight Sepang raring to begin exciting careers as pilots. pilots was going to shoot up quite drastically. The simulators (FFSs): four FFSs for the Airbus A320 The sky truly is their limit now as their future has JV was our strategy to ensure we would always and one each for the A330/340 and Boeing 737 been clearly mapped out. These freshly graduated have not only sufficient pilots but also cabin crew, Classic. As equipment and facilities needs have First Officers get to start work immediately and maintenance engineers and technicians, and increased with enrolment numbers, another CAE put the skills they have acquired to use as they ground services personnel such as ramp and guest 5000 Series A320 FFS has recently been delivered. take their positions on-board, next to seasoned officers. Meanwhile, CAE has added an IAE V2500 series Captains, who will literally take them under their engine simulation capability to a third Airbus A320 wings and continue to expand their knowledge and Among the non-pilots, cabin crew make up the FFS. expertise. largest group of trainees at the AACE. In 2012, close to 350 flight attendants in 19 batches The First Officers are graduates of the underwent various modules to improve their competency-based AACE Multi-crew Pilot License knowledge and skills to deliver unrivalled service. (MPL), an 18-month programme that has been With world-class training they receive at AACE, painstakingly developed by AirAsia and our which has been tailored to suit our particular training partner, the Canada-based CAE Inc (CAE). requirements and culture, our Allstars are stamped Like the generic Commercial Pilot Licence (CPL), with AirAsia’s unmistakable ethos and brand, the MPL trains fresh talents and qualifies them which is carried across all the countries we operate to fly commercial planes. Unlike the CPL, this in. What is more, the high level of knowledge and particular qualification produces First Officers professionalism they acquire from AACE training who have the relevant training and exposure to allows us to keep our workforce lean without fly Airbus aircraft. In other words, they are trained compromising on efficiency or quality. specifically to meet our needs. Having our own training centre is strategic in The AACE is a joint venture (JV) between AirAsia other ways too. It minimises our training costs and CAE, a global leader in modelling, simulation and allows us to retain a portion of profits within and training for civil aviation and defence. Our the Company. As an added bonus, it enables us to relationship with CAE began as a Type Rating throw open our training centre to personnel from Training Organization (TRTO) partnership, under other airlines throughout the Asean region, hence which CAE would train pilots whom we recruited establish a new and steady income stream. to fly our Airbus A320 aircraft. As we increased To increase third-party revenue, AACE in April 2013 set up a branch in Seletar, Singapore, where there are a number of other Airbus aircraft operators – both local operators as well as foreign operators with bases on the island nation. The Seletar centre, equipped with two Airbus A320 FFSs, has contributed to an increase in third-party training at the AACE to about 42% of the total, up from 10% in 2011. Combining both in-house (ie AirAsia) and third-party training conducted during the year, AACE achieved RM76 million in revenue, of which 81% was derived from pilot training. Profit, meanwhile, was a healthy RM22 million, reflecting AACE’s tight rein on costs.

These financial results are commendable, considering AACE has undergone only one full year of operations. The energetic team at the training centre, however, is already hard at work to improve these figures for 2013 and beyond. A new accounts executive has been recruited to drive further sales and to ensure customer retention via service excellence. At the same time, efforts are being made to grow revenue from non-pilot training, for example training in maintenance and cabin emergency evacuation.

Given projected growth of the air travel industry in the region generally, there is going to be greater demand for qualified ground and aircraft personnel. AACE is set to benefit from and feed this aying Off demand. In other words, just as the future is bright for AACE, it is also bright for those who dream of embarking on a career with an airline, and for the millions of passengers who will benefit from better and more efficient service from professionally trained staff. Pilot Project P AACE certainly seems to have hit on a winning formula, based on which we can safely say this is one ‘pilot’ project that is truly set to take off.

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Business Review No. of Twitter followers Social Media 680 thousand Like, Tweet, Share Us

When the top management of a company connect Though new in the role of AirAsia Berhad CEO, number of new routes in 2012 were established with their consumers via the social media in a Aireen Omar too has begun to tweet actively to from ‘talking’ with our fans. For example, Tan way that is meaningful to both parties, you know build relationships with our guests. In fact, she Sri Tony received a tweet requesting for a route they are using the platform at its highest, most has even started an Instagram account where she to Lombok, while another tweet ‘sold’ Wuying, beneficial level to humanise their brand. This is shares sneak peeks into her life as CEO as well as saying: “Can you please also open a new route to precisely what AirAsia does. Being young, vibrant beautiful photos of our destinations – all the better Xi’an? Xi’an is a 3,000 years old historical city, and and, most importantly, driven by a strong people to entice her followers to fly with us! also a hub for the northwest region in China, with focus, AirAsia has been one of the most inspiring 20 million passenger traffic in one year. It’d be success stories of use of the social media by a Doing It Right very beneficial to a low cost carrier like AirAsia.” corporation. Not long after receiving these communiqués, The fact is, we at AirAsia have not jumped on we launched the Kuala Lumpur – Lombok and While others grapple with the intricacies of gaining the social network bandwagon for the sake of it. Bangkok – Xi’an routes. fans and keeping them, we are ahead of the game, We are there because we are a people company incorporating social media into our Group’s core and for us the social media is a great platform to By acting on their tweets operationally, our fans values and using our platforms of Facebook, connect with our guests and fans. Tan Sri Tony’s feel a sense at least of ‘part ownership’ of AirAsia Twitter, YouTube, Instagram and blogs rather like tweets aren’t just one-way bytes of info; often airline, further reinforcing our brand as a people’s Lego – to build relationships, build our business, they lead to running conversations with complete airline. build efficient communication channels, build strangers who eventually feel a closer, more excitement, and – yes – build our brand. emotional connection with us. What’s Next?

Listen, Engage and Connect According to eezer.com, a social network site We were already on Facebook, Twitter, YouTube that features tweets and location-verified and blog, and in late 2011, started an Instagram By holding these principles close to our heart, reviews related to travel, AirAsia has the greatest account (@AirAsia) to showcase our Allstar we have been able to revolutionise our social number of two-way tweets between itself and its culture, allowing fans a peep into happenings at networking the same way we have revolutionised consumers among all airlines. We receive more the AirAsia headquarters. The photo-sharing app air travel. It helps, of course, that AirAsia enjoys a tweets from our guests and fans than any other proved to be a success as fans all around the globe strong leadership and has high-profile personalities airline, and rank among the top three airlines in the follow us to get a better feel of what goes on at like Group CEO Tan Sri Dr. Tony Fernandes who world that respond the most to tweets received AirAsia behind the scenes. Our Instagram success have embraced this new paradigm full-heartedly. from consumers. Numbers do not mean much, was even noted by Jaunted.com, a popular pop Every time there is something interesting to report but to every AirAsia fan who receives a reply from culture travel guide, which named us as the top on the AirAsia Group – be it new routes, or updates us, our genuine efforts to connect leave a mark. airline to follow on this social media platform. on the running bet with Virgin’s Branson, the Suddenly, we are no longer just another low-cost performance of the Queens Park Rangers, or the airline, but an airline that values and respects Meanwhile, recognising the obvious advantages search for new Allstars to staff the upcoming India people who make the time to interact with us. of connecting with the world’s most populated operations – you can expect a quick blip from country, Tan Sri Tony started a Weibo account in @tonyfernandes. And our fans realise that our ‘conversations’ with late August. With our in-country social media team them are for real. We truly listen to what they providing quick translation services, he currently say – social media is a great source of valuable, has over 76,000 followers. raw feedback – and we act on their comments. A No. of “Likes” on Facebook 1.8 million

No. of Instagram Followers 28 thousand

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Business Review social media

Why Connect with AirAsia? The socialites greater possibility of them being ‘converted’ into flying guests. We believe in creating value for our fans, hence To keep our fans coming back for more, our young they are regularly treated to exclusives on our and dynamic in-house social media teams in 13 Our efforts to reach out to our fans and build latest news and promotions. New routes and our regions work hard to keep a constant flow of relationships with them have not gone un- highly awaited one million free seats offer, for innovative marketing promotions and campaigns noticed. We won the Budgies and Travel Award example, are blitzed on our social media before going. In 2012, for example, utilising YouTube, 2012 for the Best Social Media and were named any other marketing platform. Route launches we ran a video contest to fly fans from around by Socialbakers, a leading social media network are also generally accompanied by a social media the region to attend the mega Japanese summer statistics and analysis company, as a Top 10 contest offering free seats. In addition, milestones festival, Summersonic. In China, we offered our Socially Devoted Global Brand for effective are celebrated with contests. In conjunction Weibo fans the opportunity to catch a QPR dialogue with our guests and fans. Not only are with AirAsia X’s fifth anniversary, for example, English Premier League match live at Loftus Road, we the only low-cost airline in the world on the we offered an entire flight from Sydney to Kuala London, via a most-creative video contest. list, but we are also ranked quite high, at no. 4. To Lumpur to the lucky Australian who could fill up drive deeper and more meaningful engagement all 302 seats on-board with Facebook friends. While building our brand, these competitions also with our guests and fans, we will stay in tune with Every one of these 302 Australians are probably reinforce our following, providing us with an ever- what they want and need, and cater to these. Our now AirAsia fans for life. growing base to target our commercial efforts. ultimate aim is to be the best-in-class new age As of end December 2012, we had 1,695,340 social company. That means constantly unlocking We even respond to SOS pleas from our fans. One Facebook fans, up from 1,327,040 at end 2011. The even greater value in all our product and service family that was flying to Bali got their outbound number of our Twitter followers almost doubled propositions. dates mixed up and would have missed a family from 288,392 in December 2011 to 555,793 in wedding, if not for a last-minute Facebook December 2012. In China, as at end 2012, we had And so long as we keep getting messages along message to us. We responded immediately, more than 700,000 Weibo followers. Given the the lines of the following from Catur Wahyudi, changing the flight date to a day earlier at no easy link between social media platforms and who said: “Gonna have my first AirAsia flight to extra cost to our guests, and the very appreciative online portals, social media activity increases the Bali! Despite being an Indonesian, I’ve never been family got to the wedding well on time. This was number of visitors to the Group’s website; in 2012, to Bali. Thanks to AirAsia” – we know we’re on the one case of customer service, enabled by social a total of 2 million followers made the transition right track. media, that will always be remembered. from social media to website, where there is a

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Business Review Ancillary Income onger on the Sidelines No L

Starting off quite humbly, with the primary aim to offset Bali and Jakarta. The service seems particularly popular increases in the price of fuel, our ancillary business has among business travellers and big families for whom grown not only into a significant revenue earner for the hassle-free travel is a huge bonus . AirAsia Group but is also now providing an avenue for us to further increase cost and operational efficiencies and Some of these services, such as online check-in and thus maintain our vaunted position as the world’s lowest- pre-booked baggage, afford us smarter staff utilisation cost carrier. and cut operating costs. To encourage greater take- up of the latter, at the beginning of 2012, we reduced Essentially, our ancillary sources of income are derived our pre-booked baggage fees. Eventually, however, we from non-essential services, the add-ons that make discovered that guests with check-in luggage will pay flying with us that much more enjoyable, convenient for the service, even at a higher cost, so long as it is still and memorable. Ancillary allows guests, for example, to cheaper than counter check-in. We therefore restored our savour Pak Nasser’s nasi lemak, which has gained almost service fees to their original levels and, as expected, it legendary status; as well as to breeze through connecting did not decrease the take-up rate. Consequently, revenue flights without the need to re-check in with Fly-Thru; increased (in Malaysia), from RM296 million in 2011 to choose seats in advance (via Pick-A-Seat) and get the RM326 million in 2012. Red Carpet treatment, complete with priority check-in, boarding, use of a Premium lounge and fast-lane service In a different way, pre-booking meals allows us to cut into the plane. down on costs, by reducing wastage. To encourage greater take-up of this service, we have reduced prices for That guests appreciate these services can be seen in the our pre-booked meals, making it significantly cheaper to way they’ve grown. Since its introduction in Kuala Lumpur order online than to purchase one’s meal on-board. We in March 2012, AirAsia Red Carpet has been extended to also extended the period of pre-booking a meal up to 24 Kuching, Kota Kinabalu, Penang, Johor Bahru, Singapore, hours before flight time. To entice more passengers to partake of our inflight meals, we added a total of Pick-A-Seat across the Group increased by 21.5% was 55% of total cargo tonnage at the warehouse 18 new hot meals, light meals and desserts added from RM107 million in 2011 to RM130 million. With that also serves the likes of Cathay, Emirates, while introducing 14 new snacks and beverages absolutely no administration costs to us, this is an Saudi Airlines, Qatar and Federal Express. In 2012, including co-branded Chatime drinks and popular area that we intend to develop more strategically moreover, it had the third largest share of cargo pastries from Aunty Jud’s Corner such as her to further increase our revenue. movement in and out of KLIA, up one position Baked Cheese Cake and Triple Chocolate Muffins. from 2011. Our cargo service also has performed well We even signed on celebrity chef Farah Quinn to despite a general industry lull which affected A key differentiator of AirAsia Cargo is its spirit of serve as food ambassador on Indonesia AirAsia, the full-service segment in particular. Its lean innovation. The team here is constantly looking for and introduced new labeling that includes the organisational structure – with an average ratio of new and better ways of carrying out its role, and in food’s nutritional value. The latter has earned 4,600 aircraft movements to one personnel or 1.55 2012 came up with a number of initiatives that add us a letter of appreciation from no less than the million kilos per personnel – seems to have worked to efficiency. It introduced a cargo colour coding Director General of Health Malaysia. in AirAsia Cargo’s favour. system, which has helped to decrease misrouted cargo from an average of 0.5% to 0.04%; and The results of these initiatives? An improved survey In 2012, it saw a 6.4% increase in tonnage – as added an online chat/query function to its web- rating of 10%, and an increase in revenue for the compared to an industry drop of 1.5% – and an based system to help facilitate effective and Malaysian F&B operations from RM54 million in average load factor of 48.7%, compared to the efficient communication with customers. 2001 to RM63 million in 2012, with income per pax industry average of 45.2%. AirAsia Cargo also growing from RM3.06 to RM3.34. scored higher than the industry average on the Its sterling performance has led to AirAsia Cargo Departed as Planned (DAP) metric, which indicates winning the World’s Best Customer Care Award by Pick-A-Seat represents the third prong of our efficiency of cargo delivery, at 94%. Both AirAsia UK-based publication Air Cargo Week (ACW) two ‘star’ ancillary threesome of baggage, assigned Cargo’s tonnage and DAP out-performed a years running – thereby achieving a global first; seats and F&B, which account for about 70% number of significant and key cargo airlines in the and to being named Rising Star Carrier of the Year of the Group’s ancillary income. Revenue from world. Just as an indication, its tonnage on average by Payload in Singapore. 153 ad a Berh AirAsi 154

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Business Reviewome Ancillary inc

MONETISING OUR DATABASE are able to maintain impeccable product quality. BRANCHING INTO ADJACENCY BUSINESSES We also introduced a new distribution system Other than the flight-related services described in which warehousing is outsourced, allowing us The principle of monetising our database, or above, our ancillary business encompasses to better manage the risks of theft, damage and indeed other assets, has been taken a step further monetising AirAsia’s extensive database, and mismanagement. The new system also enables us into a new realm of business that we ventured the popularity of our website, to earn additional to process online orders in real-time and have live into in 2011, which we call ‘adjacency’. The idea income. In 2012, we attracted an average of 131.52 inventory management. here is to identify a partner that has the expertise million views and 8.60 million unique visitors who or resources which we lack and which can be spent on average 9.33 minutes on our pages. AirAsiaRedTix, meanwhile, ticketed about 70 applied to our assets to create great business What is more, 44.8% of these visitors returned to events, three of which were sold-out shows, synergies... at little or no extra cost to us. To date, the website within less than one day. namely the Russell Peters Live in Malaysia, we have entered into three such joint ventures: BigBang Alive Galaxy Tour 2012 and Beauty & AirAsiaExpedia and our BIG loyalty programme, To capitalise on our captive web audience, we the Beast – the Musical. It also became the top both of which leverage on our database, as well as provide online services such as AirAsia Megastore, internet ticketing agent for the LEGOLAND the Asian Aviation Centre of Excellence (AACE), an online merchandise outlet; and AirAsiaRedTix, a Malaysia theme park in Nusajaya, Johor selling which builds on our existing training resources. marketing and sales unit for red-hot ticket events. more than 65,000 annual passes valued at more than RM12 million, and was appointed by Themed In AirAsiaExpedia, we have partnered with the The year 2012 was significant for AirAsia Attractions & Resorts as the exclusive partner for world’s largest online travel agent, Expedia, to Megastore not only because it achieved profits for internet ticket purchase for the grand opening of offer our guests attractive hotel and travel deals the first time but also because the entire business the Puteri Harbour Family Theme Park in Nusajaya, all over the world. AirAsiaExpedia has subsumed was revamped and re-launched to be more focusing on the Sanrio Hello Kitty Town and The AirAsiaGo, previously our own online hotel and attractive and relevant to clearly identified target Little Big Club theme park. travel package booking agency, and is truly going customer segments, while presenting a consistent places. BIG, meanwhile, represents a partnership AirAsia brand look and feel. AirAsia Megastore In the sporting arena, AirAsiaRedTix sold more with Tune Money in which we offer our guests now has a new website, which is reinforced by an than 40,000 tickets to Queens Park Rangers’ the opportunity to earn free flights from flying on-ground kiosk at the Low-Cost Carrier Terminal matches against the Malaysian state football with us or by using the services of any one of our (LCCT) in Sepang, as well as in-flight catalogues teams of Kelantan and Sabah. Other notable wins merchant partners. The AACE, meanwhile, is a on-board the aircraft. included being appointed by VISA International world-class pilot training centre which also offers to administer VISA Privileges for cardmembers, other training modules for aviation personnel from But perhaps more importantly, operations have earning a management fee of RM150,000; and flight attendants to engineers, both to AirAsia been shaken up to be more efficient, hence reinforcing its presence on the social media by Group as well as third parties. profitable. About RM2 million of excess and attracting more than 21,000 ‘likes’ on its Facebook obsolete Cars and Transformers inventory and more than 7,500 followers on Twitter. All three businesses have celebrated their first was eliminated through various channels full-year of operations in 2012, and achieved including corporate events. We rationalised our very encouraging results, which are described in merchandise supplier list by signing on vendors greater detail in their individual write-ups in this that abide by a high level of business ethics and annual report. FINANCIAL PERFORMANCE

Given that revenue from AirAsiaGo is no longer channeled towards our ancillary stream, we experienced a slight drop in ancillary income from RM45 per pax in 2011 to RM40 per pax in 2012. This, however, still translated into a sizeable 16% of the Group’s total revenue for the year, which helped to buffer the US$1 per barrel increase in the price of oil. Ancillary continues to serve its initial function of ‘insuring’ us against fuel price fluctuations, and we are committed to further growing this business to safeguard our low-cost model.

We have therefore been scouring conscientiously for different means of further boosting our performance in this business area, with positive results. We have, for example, identified much scope to increase online services in areas such as guest check-in (to encourage this, we would impose a higher counter check-in fee) and the pre-purchase of in-fight meals.

There are also immense opportunities in revamping our duty free business to offer guests a larger choice of products via better distribution channels that include pre-online orders for collection on-board as well as online (ie cashless) purchases on-board. According to widely available data, the largest spenders in the duty free world in terms of percentage of total spending are from China followed by Russia, Japan, the US, Indonesia, Brazil, Saudi Arabia and Hong Kong. Out of those eight countries/territories, AirAsia Group flies to five, demonstrating the potential upside of duty free in the future. On-board sales will be supported by plans to install WiFi systems in our aircraft, thus allowing guests to purchase duty free through a dedicated website and to pay electronically with credit or debit cards.

But, most strategically, we intend to mine the huge database that we have in a systematic manner to create more targeted marketing of our ancillary offerings. For example, we will use enhanced analytics to better understand the spending habits of guests and target sales offers or promotional bundles accordingly. We will also up-sell travel essentials based on guests’ destinations, and cross-sell our partner hotels. To increase our brand loyalty, we will offer promotions to AirAsia members that are not available to members of the public, and we will make it more convenient for guests to make bookings or purchases by introducing new mobile platforms.

In other words, we have many initiatives in the pipeline to offer our guests many more products and services at great prices and even better convenience. While further enhancing our guests’ travel experience with us, we will be boosting our revenue – yet another win-win solution for ancillary, adjacency and customer delivery!

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Sustainability Report

Serving the Community 158 Culture of Transparency & Service Excellence 166 An Allstar Workplace 168 Efficiency & the Environment 174

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Sustainability Repo

AirAsia started out 11 years ago with two aircraft serving six destinations; today we have 123 aircraft flying to 81 destinations in 18 countries via 160 routes. From a staff strength of about 250, we now provide employment to more than 10,000 people in Asean. We have managed this Serving the Community phenomenal growth because of our business model, which focuses on creating cost and operational efficiencies in everything that hiswe allowsdo, so usthat to the keep savings to our can promise be passed of ‘N owon to our guests. T everyone can fly’ – a promise that can be verified by the 174 million guests who have flown with us.

We believe that our cost and operations-efficient framework not only allows us to be the lowest-cost airline in the world, but also builds the sustainability of our business. In other words, sustainability forms one of our core values and is integral to the way we run our entire organisation. It has been integral to our growth from Day 1 and will continue to guide us as we continue along our journey from an Asean to an Asian airline.

As we know only too well, being sustainable means adapting and reinventing processes and procedures all the time. What served us well 11 years ago would certainly be insufficient for our needs today. Hence we have over the years built on and improved our processes and systems. In 2010, we embarked on a massive Group-wide initiative called the Continuous Improvement Programme (CIP), which seeks to empower our Allstars to drive improvement initiatives in line with the Company’s overall vision and goals. This programme has already created some quick wins for us, but is ongoing and will contribute significantly to the Group’s future growth.

As a responsible corporate citizen, we recognise that we have a duty to be transparent and to keep our stakeholders informed of our plans and strategies. In the last eight years, we have updated our shareholders of all financial and operational highlights via our annual reports. This year, in line with the Malaysian Code on Corporate Governance 2012 (MCCG 2012) issued by the Securities Commission, we are taking the level of our disclosure even further by producing a Sustainability Report.

Given that this is our first Sustainability Report, we acknowledge that there may be gaps in the information provided. However, this will be an annual initiative and we would like to assure our stakeholders that we are committed to improving on our disclosure with every subsequent edition. We have the advantage of being able to draw from established practices in sustainability reporting, and are confident of a progressively enhanced product over the years. We have, in fact, already adopted global best practices in this report by outlining our sustainability initiatives in the four main categories of the Community, Marketplace, Workplace and the Environment. These are outlined in the pages to follow. Serving the Community

As a result of enabling air travel, we have opened up many possibilities for the people of Asean and beyond. We have brought people together, helped businesses thrive and, to some extent, we have even changed lives by making lifelong held dreams come true. Taking our commitment to local communities one step further, we founded the AirAsia (L) Foundation (AirAsia Foundation) in March 2012 to provide more focus and structure to our social sustainability commitment. With the Foundation, we are better able to reach targeted communities and achieve our desired impact in giving back to the people who have made it possible for us to come this far.

AirAsia Foundation

AirAsia Foundation is committed to building local capacity within Asean in areas where we can make a real and meaningful difference using our unique expertise and resources. Considerable time was invested in identifying the Foundation’s focus areas, which included a company-wide survey to gather input from our Allstars as well as reviewing letters and comments that AirAsia had received over the years from various stakeholders including guests and non- governmental organisations. Finally, the Foundation team chose three areas of focus: social enterprise, heritage & conservation and anti-human trafficking initiatives.

The Foundation has appointed a Council of Trustees comprising high-profile individuals from Asean who are willing to take a lead in projects related to their fields of expertise; and who believe in the future of an Asean Community. Among this group are AirAsia Group CEO Tan Sri Dr. Tony Fernandes and Deputy Group CEO Dato’ Kamarudin Meranun, who bring to the table years of experience as entrepreneurs. They are joined by four other highly accomplished individuals, who complement their skills in areas relevant to the Foundation’s objectives:

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Tan Sri Dr. Tony Fernandes Sustainability Report Serving The Community

Youk Chhang

Katrina Legarda

Dato’ Kamarudin Meranun

Dr. Veerathai Santiprabhob

Dr. Anies Buswedan

• Atty Katrina Legarda, a prominent legal practitioner in the Philippines, well-known for advocating women’s and children’s rights. Legarda, who has been appointed Chair of the Foundation, is also the Founding Chair of the Child Justice League which provides free legal assistance to children in conflict with the law. Legarda was responsible for initiating child protection training for top law enforcement and judicial officials in the Philippines. She is guiding the development of AirAsia Foundation’s Anti-Trafficking in Persons training module.

• Dr. Anies Baswedan, head of the Paramadina University in Jakarta, Indonesia. Dr. Anies, recognised in 2008 by the US-based global Foreign Policy magazine as one of the world’s top 100 public intellectuals, founded the Gerakan Indonesia Mengajar, a movement that deploys university graduates to teach in remote areas of Indonesia. He plays an instrumental role in helping spread the Foundation’s values to a new generation of Indonesian youth.

• Youk Chhang, Executive Director of the Documentation Center of Cambodia (DC-Cam) and a survivor of the Khmer Rouge’s ‘killing fields’. Youk’s work in war crime documentation began in 1995 when he set up a field office of Yale University’s Cambodian Genocide Program. The field office grew to become DC-Cam, which is reintroducing this chapter of Cambodian history into the national curriculum. Youk is also passionate about the preservation of historical sites.

• Dr. Veerathai Santiprabhob, a top Thai economist who played an instrumental role in the country’s recovery following the 1997 Asian Financial Crisis. In his last appointment as the Chief Strategy Officer of the Stock Exchange of Thailand, Dr Veerathai was a strong proponent for the creation of the ASEAN Exchange. Dr Veerathai brings the highest standards of governance to the Foundation as well as extensive experience enabling Asean- level collaboration.

Social Enterprise

The Foundation aims to leverage on AirAsia’s entrepreneurial edge to empower communities, thus help them to improve their socio-economic standing in the long term. To date, we have ‘adopted’ two Malaysia-based social enterprises which we are supporting via funds as well as training. These are the Gerai Orang Asal, which serves to promote the livelihood of indigenous minorities in Malaysia; and Silent TEDdies, which focuses on providing the hearing-impaired with income-generating skills. Gerai Orang Asal in Gerai Orang Asal (Gerai OA) Malaysia Gerai OA is a volunteer-run, non-profit venture that seeks to document, revive and revitalise the crafts of indigenous minorities in Malaysia. Gerai OA volunteers collect craft products from the artisans’ villages for sale at craft fairs. All profits are returned to the artisans together with donations of medicines, clothes and food. Gerai OA currently supports 30 villages and more than 100 indigenous artisans across Malaysia.

AirAsia Foundation provides Gerai OA volunteers with complimentary return flights and baggage allowance to facilitate their work. So far, we have provided one free passage from Kota Belud, Sabah to Kuala Lumpur for a volunteer to participate in the annual National Craft Expo in March 2012; and two flights in September 2012 for coordinators to participate in technique-exchange workshops at the World Eco-Fibre and Textile (WEFT) Forum in Kuching, Sarawak.

Silent TEDdies Beginning in November 2012, we have been selling fresh, preservatives-free cookies from the Silent TEDdies Bakery of the Kuala Lumpur Community Service Centre for the Deaf (CSCD) on our flights. The Silent TEDdies project began as a Teenage Entrepreneurial Development (TED) initiative by the CSCD to provide employment opportunities for hearing- challenged youth. Established in 2010, the bakery produces up to 600 loaves of bread per month and 30kg of cookies daily.

We have a standing monthly order of between 5,000 and 10,000 bags of cookies from the bakery. Between November and December 2012, we sold 13,830 bags of Silent Teddies cookies, raising funds to support the bakery and CSCD’s programmes. The collaboration with AirAsia also raises the profile of the TED programme to new supporters and patrons.

Heritage & Conservation

We believe that by supporting the conservation of heritage sites in Asean, we will be supporting regional tourism in a meaningful way. Our conservation projects, further, would serve as ideal platforms to create powerful messages in all our media channels underlining travellers’ role in preserving Asean’s cultural heritage for the benefit of future generations.

Cambodian Living Arts AirAsia Foundation awarded its first grant in October 2012 to Cambodian Living Arts (CLA), a Phnom Penh-based NGO founded by former child musician and Khmer Rouge refugee Arn Chorn-Pond. CLA seeks to revive Cambodian performing arts after two decades during which many artistes and musicians perished. CLA began by supporting classes given by four Master Artists to Cambodian youth, and now supports 16 Master Artists and 11 assistant teachers in a programme reaching out to over 200 students across Cambodia. Silent TEDdies in Malaysia

The Plae Pakaa Project in Cambodia

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The Plae Pakaa Project in Cambodia

AirAsia Foundation’s partnership with CLA began Anti-Human Trafficking Spirit of Allstar Volunteerism with sponsoring its participation in the 2012 Penang Georgetown Festival, following which People trafficking is one of the most significant We believe it is important to engage our Allstars in CLA submitted a proposal for the Foundation challenges facing the region. The US State our community outreach programmes so they feel to support an expansion of its weekly dance Department in its 2012 Trafficking in Persons a sense of ownership of these, while also forming performance at the National Museum of Cambodia Report ranked all 10 Asean countries as Tier 2, closer bonds among each other. Every year, two into a daily show. Under the resulting Plae Pakaa indicating non-full compliance with US Trafficking blood donation campaigns are held, which receive (Fruitful) Project, AirAsia Foundation is funding Victims Protection Act’s minimum standards. As very positive response. In addition, we organise year-long classes for 100 students. It is also bearing much of human trafficking relies on air avel,tr we various activities that involve the participation of the start-up costs to establish a daily show at the feel a strong sense of obligation to play our part in our staff. museum, which is one of the most visited in the addressing the issue. region. In October 2012, we held our first regional The Foundation is funding the development of a volunteer activity by putting together an AirAsia Just two months from the commencement of the training module to create greater awareness among Allstar Diving Team to conduct a Reef Check show on 1 November 2012, it had attracted 2,025 our frontline staff (guest service officers, cabin Survey at the Batangas Reef in the Philippines. visitors, earning RM61,500 in ticket sales, product attendants and security personnel) of trafficking, While we funded the team’s training by underwater sales and donations. The Plae Pakaa Project and enable them to take swift action should they scientist Carina Escudero, Philippines’ AirAsia has also been featured in our inflight magazine, suspect any trafficking activity in the course of CEO Ma’an Hontiveros, who is also Chairperson of Travel3Sixty°, to promote sustainable tourism their work. This includes handling cases sensitively Reef Check Conservation Programme, Philippines, activities to Phnom Penh visitors. and developing reporting and referral mechanisms hosted the team during their five-day stay in the so that the relevant enforcement agencies and country. The objective was to train our divers to support organisations can step in and provide the be able to conduct reef checks, hence support the victims with necessary assistance. conservation efforts of scientists.

Meanwhile, a regional campaign against human Meanwhile, our affiliates also carried out various trafficking will be launched, riding on AirAsia’s CSR activities in their home countries. Blood Donation Campaign strong communication channels. We are set to be the first airline to internalise efforts to combat Thai AirAsia organised a Sharks Can Fly campaign human trafficking and, in the process, help shape with Siam Ocean World in conjunction with World the industry’s response to the issue. Oceans Day on 8 June 2012 to promote greater appreciation of the marine world. The airline flew Donation drive in 20 brownbranded bamboo sharks and 20 students the Philippines from the Pathumwanram School from Bangkok to Trang for the students to be able to release the sharks into the sea at the Hat Chao Mai National Park. On the trip, the students also got to study the local ecosystem up close.

Our Thai affiliate also supported the efforts of Bumrungrad International Hospital in Bangkok to provide free surgery for underprivileged Myanmar children with congenital heart defects by flying in six children from Yangon and contributing funds for the surgery of four of them. This initiative was carried out in collaboration with the Bumrungrad Replenishing sand in the river Hospital Foundation, the Thai Embassy in Yangon where the elephants bathe in and Myanmar’s Ministry of Public Health. The Kuala Gandah, Pahang children who underwent surgery were patients at the Children’s Hospital in Yangon. Reef Check Survey at the Batangas Reef in the Philippines AirAsia Caterham Driver Development Programme In 2011, we launched the AirAsia Team Lotus Driver Development Programme (now AirAsia Caterham Driver Development Programme), led by former Malaysian Formula 1 (F1) racer Alex Yoong, to train Asean youth in Sharks Can Fly campaign with Siam F1 racing. We subsequently opened the programme to Ocean World in Thailand aspiring and talented racers from the US and UK too, to drive a greater spirit of competitiveness in the hope of nurturing a world champion.

AirAsia Badminton Academy The AirAsia Badminton Academy (AABA) was established on 26 September 2012 in Petaling Jaya, Selangor, to train a new generation of badminton players and provide them with the funding needed to realise their ultimate dreams. AABA supports the work of the Badminton Association of Malaysia in uncovering talents at the grassroots level and helping to build a strong Free surgery for underprivileged national team in the future. Myanmar children with congenital heart defects Thai AirAsia is also a staunch supporter of sporting activities. In 2012, it sponsored 15 football clubs in the Other CSR initiatives of Thai AirAsia included At the same time, our energetic and dynamic Thai Premier League and Division, organised activities offering free flights for a year to National Allstars themselves run several of their own for fans and gave out free tickets to various football Artists, thus enabling them to showcase their fund-raising activities in order to support matches. It also took two outstanding children from its works at local and regional exhibitions; and causes they feel strongly about. In April 2012, football clinic to visit QPR football club in London. In chartering a free flight on 23 November to our engineers put together a Charity Climb up addition, Thai AirAsia flew 12 budding tennis players to take the media and members of the public to Mount Kinabalu and raised RM100,000 for the compete in the Junior ATF competition in Indonesia; and Kathmandu, Nepal, where they helped renovate purchase of prosthetics for underprivileged became an official sponsor of the Volleyball Association the Buddhist temple in Lumbini, believed to be children in need of artificial limbs. The initiative of Thailand, providing all the travel needs of the team to the birthplace of Buddha. enabled us to buy prosthetics for 15 youths. attend matches.

Indonesia AirAsia focused on underprivileged In late March, the AirAsia Singapore team made children from the Bojongrenged II Elementary an overnight trip to Siem Reap in Cambodia School. On 24 May 2012, it hosted a visit by 50 taking gifts of clothes and stationery to an children from the school to Soekarno-Hatta orphanage in Kampong Plok. And on 6 June, Charity climb up Mount International Airport, and later organised a Thailand’s Allstars helped to build a new home Kinabalu in Malaysia ‘career day’ at KidZania to inspire and empower for flood victims in Ayutthaya. the children. AirAsia Indonesia also donated four laptops, study tables and chairs, learning Nurturing Sporting Talents equipment and 100 books to the school. AirAsia has a track record of supporting talents In the Philippines, our affiliate carried out in the region and beyond in order to develop AirAsia Badminton two relief operations for typhoon victims and world-class sporting champions. This serves Academy organised a field trip for children with special the double purpose of enabling regional needs. talents to shine internationally, while also establishing us as a ‘champion airline’ – one that champions the people while also championing the kind of dedication, commitment and sheer Students of Bojongrenged II Elementary School in Indonesia perseverance that goes into becoming a world champion.

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o ensure we maintain Culture of Transparency & Service Excellence AirAsia has always abided by the highest principles of integrity in all our dealings with our various stakeholders. T our standards, we are committed to adopting and implementing

principles and best practicesOur Board as of Directorsrecommended takes the lead in stampingby the a strongMalaysian culture of corporate Code governance in line with our Board on Corporate GovernanceCharter. 2012. This is supported by our Code of Conduct, which outlines behaviour we expect of everyone in the organisation. We are further guided in our day-to-day operations by our Auditor Independence Policy, Risk Management Framework and Policy, Whistleblower Policy, Corporate Disclosure Policy and Conflict of Interest Policy.

Within the Marketplace, we ensure that we provide timely and accurate information to all our stakeholders, in particular our shareholders and the investment community; and we are committed to a high level of customer service delivery and safety. The latter is being driven by our overarching Continuous Improvement Programme.

Shareholder Communication

We engage with our shareholders at meetings, and provide ready access to corporate information in our annual reports, on our website and via investment market briefs (which are sent primarily to institutional investors).

Notices of our general meetings are provided in our annual reports and CD-ROMs circulated to current shareholders via registered mail, while also being advertised in the local newspapers and announced to Bursa Malaysia Securities. We positively encourage our shareholders to participate in these meetings to be apprised of current developments and to provide feedback on the Company’s general direction.

We submit regular reports to Bursa Malaysia English for International Communication (TOEIC) baggage handling, announcements, baggage drop Securities on our financial performance, as as a standard English-language proficiency test management, facilitating Fly Thru transit, reducing well answer any queries they may have on for flight attendant candidates. The test is offered misrouted baggage, minimising wheelchair delays, our operations. All such announcements and through Eshia & Associates Sdn Bhd, the country managing last-minute wheelchair requests and responses are approved by the Group Chief representative of Educational Testing Service last-minute check-in, and gate management. Executive Officer, Deputy Group Chief Executive (ETS). Officer or Chief Executive Officer or, in their To date, 23 CIP projects have been completed. absence, the Chief Financial Officer. Continuous Improvement Programme Those completed in 2012 include: reducing Auxillary Power Unit (APU) usage to 200 hours These announcements, as well as all our The Continuous Improvement Programme (CIP) per month; leasing ramp equipment to reduce press releases, financial data and investment was established in 2010 to simplify our processes, maintenance costs; minimising ramp delays; presentations for the preceding three years are systems and human resources to reduce costs reducing the purchase requisition cycle time to 10 also available on our website at www.airasia.com. while increasing productivity to help us achieve days; and enhancing the processes for recruiting, our long-term vision. The ultimate goal of the training, grooming, and increasing the productivity Customer Service Excellence CIP is to achieve total savings of US$20 million of cabin crew. In terms of fuel-efficiency, we also in five years, i.e. by June 2017. Towards this reduced fuel burn via flap-3 landing compliance, We strive continuously to improve our operational end, we engaged GE to develop a Cost Out and reduced discretionary fuel uplift by pilots to efficiencies so as to serve customers to the Avoidance Programme for AirAsia, which involves 600kg. best of our ability. In January 2012, this saw the implementation of a Sigma Black Belt programme deployment of a cutting-edge airline management to empower our Allstars and enable them to Ongoing CIP projects include various initiatives system, merlot.aero, which allows us to optimise contribute towards greater operational efficiency. to further reduce our fuel consumption and other our aircraft and crew utilisation, thus further wastage (such as inflight food and paper in our improving our on-time performance and minimise In addition, we have developed our own Station offices); to streamline our vendor management costs, among others. Excellence Programme (StEP) to implement process; and to improve on-ground efficiencies Allstar-driven quick yet effective change at such as in warehousing; reducing the queue- We also believe it is essential that our Allstars our stations. A StEP circle has been formed at time at check-in counters, and reducing Customs possess a good grasp of the English language to each of our 31 stations comprising five to eight processing time. communicate effectively with each another as well Allstars. This circle meets regularly to identify Culture of Transparency & Service Excellence as with our guests. We therefore ensure that new and analyse work-related problems, especially Just one year post-CIP, in 2011, we achieved recruits satisfy a minimum requirement in terms of in areas of quality and safety, and to initiate RM23.54 million in cost savings; and in 2012, listening, reading, writing and speaking in English. projects to resolve these. Among the projects that we realised another RM11.47 million in regional As of May 2012, we have been using the Test of have been identified are boarding management, savings.

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opular ravel and eisure, T eading Graduate In 2012, AirAsia was named the Most P Graduate Employer in L wards. Hospitality at Malaysia’s 100 L AnEmployers Allstar 2012 WorkplaceA This was the first time we had won this award and feel validated by the recognition given to us for our sometimes unconventional, yet always strategically-driven approach to human capital development. We truly believe that our Allstars are our greatest assets, therefore we invest significantly in recruiting and retaining the best talents. Our goal is to provide a conducive environment in which our Allstars feel motivated to realise their potential while contributing in a meaningful way to the attainment of our vision and goals.

A strong component of our corporate culture is individuality. We celebrate our Allstars’ individual interests, passions and beliefs. We value the diverse perspectives that our Allstars bring from different cultural, geographic and educational backgrounds. At the same time, we place great emphasis on teamwork; and with this all-uniting focus, we are able to bring together the richness of knowledge, experience and skills of our Allstars to create amazing synergies. These allow us to keep innovating and pushing boundaries as we, as an organisation, develop and expand.

Tan Sri Dr. Tony Fernandes addressing the Top 50 finalists during the third stage of the NGL interview process. The 19 successful NGLs graduating from the six-month induction programme

NGL finalists participating in a bootcamp in Perak. Lean Six Sigma Resourcing & the Next Generation Leaders Under our Continuous Improvement Programme, Resourcing is responsible for making sure AirAsia GE is managing a Lean Six Sigma programme has the right people in the right job at the right for our Allstars. This programme develops the time and the right price. It’s about filtering in interpersonal and leadership skills of our Allstars people from the outside who share our culture and by allowing them to take ownership of work beliefs (apart from having the right competencies), improvement projects. Participants are certified and giving existing employees opportunities to as Black Belts or Green Belts, according to the develop and challenge themselves with new jobs number of projects completed among other and roles. factors such as demonstrating their ability to be effective change agents. To date, we have trained In 2012, we embarked on a regional recruitment 88 Green Belts and 63 Black Belts. and development programme – called the Next Generation Leaders (NGL) – to bring on-board Allstar Engagement smart young professionals with a few years of work experience who have the right AirAsia spirit, The culture that we have built at AirAsia is based and train them for leadership positions across on the simple premise that every Allstar carries the AirAsia Group. We received thousands of equal weight and responsibility in the success of applicants from Europe, Australia, Canada and the the organisation. That is why we have an open- Asean region, of whom 19 were selected after a office concept and a flat organisational culture rigorous procedure that included five stages of: 1) where juniors mingle freely with those more shortlisting from applications; 2) phone interviews; senior, and indeed even with the CEO. Various 3) group assessment at the AirAsia Academy; opportunities are provided to engage with our 4) bootcamp in Gopeng, Perak; and 5) report Allstars and to obtain their feedback on how things submissions. can be done better.

Of the successful 19 NGL candidates, one is In February 2012, we launched our latest The selected Australian, three are Indonesians, two Filipinos, engagement programme called the Big Red NGLs on their first one Thai and 12 Malaysians. Two among the Awesome Idea Network (BRAIN). This rests on a day at AirAsia group were internal staff. The group was given a concept known as crowdsourcing, the idea being Academy combination of traditional classroom training as that challenges faced in any organisation can be well as on-the-job experience via attachments to at least partially managed by opening the solution various departments and functions. They were process to ‘the crowd’, namely all employees. Under also required to handle special projects and BRAIN, all Allstars – from ramp staff to senior challenges, both work-related as well as team- executives – are encouraged to identify aspects of Special performance by the NGLs at Redfort related, while being taken on industry visits so their daily work that can be improved. They are also as to obtain a comprehensive and clear idea of given the opportunity to contribute, comment on the aviation industry and where we stand in it. and vote for ideas put forward to improve business- After their six-month induction programme, they related tasks and services. The initial phase of the were assigned to respective departments where project was conducted in Malaysia from 15 February they will continue to be challenged and be given to 9 May 2012, attracting 195 suggestions from over opportunities to fast-track their careers with us. 100 Allstars. Since then, our BRAIN has gone Group- wide reaching out to all Allstars. Although this process of selecting candidates is time- and cost-intensive, we believe it serves our purpose in the long run as we are able to get to know our candidates better and can cherry-pick those who truly present the right fit with AirAsia.

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Rewards and Performance Management Clubs & Organisations an annual breast check conducted within our corporate premises by a qualified doctor. These AirAsia is a performance-centric organisation AirAsia promotes a healthy lifestyle via numerous health checks are held in all our hubs. To create and there are no barriers to career progression clubs that get our Allstars moving and fit. We greater awareness of personal safety, we arrange for those who perform consistently well. Allstars believe physical fitness lends to better productivity, for First Aid Training. We also help Allstars cope can be recommended for promotion at any point while engaging in these activities as a group with stress by offering weekly yoga classes and, if throughout the year, with accompanying increase promotes greater team spirit and a feeling of there is sufficient demand, organise Yoga Retreats in their salary. We conduct Talent Reviews to carve cohesion among colleagues. to serene locations such as Chiang Mai. a career path for high performers and critical staff as well as to manage under-performers. In Adrenaline junkies are catered to by the Red Work-Life Balance addition, all staff participate in and complete Outdoor Club which organises activities such as the Expectations, Goals & Measurements (EGM) mountain climbing, caving and water rafting year To promote a healthy work-life balance of our exercise, as well as our Mid-Year and End Year round. Holding to the motto ‘dream the impossible Allstars, we run activities that involve their families Reviews, which determine bonus payouts. and don’t take no for an answer’, even beginners such as our annual Family Day. In 2012, this was are encouraged to take part in the activities held in Kuala Gandah, Pahang, where everyone Towards staff retention, we have standardised Exit and benefit from the team spirit to surpass their joined in to contribute to the local community Interviews and Attrition Analysis, which allows us own expectations. In 2012, the club led trekking by donating books, replenishing sand in the river to better understand the core reasons for people expeditions to scale Mt Tahan in Pahang and Mt where the elephants bathe and repainting the leaving the organisation, thus undertake remedial Batu Puteh in Perak. elephant enclosures in the elephant sanctuary. action to rectify any gaps or shortcomings that exist in our policies or procedures. Endorphin addicts, meanwhile, congregate at Catering specifically to staff’s children, we have the Allstars Running Club, which not only meets the Allstars Junior Club which organises various Employee Relations Programme and sweats it out weekly at the AirAsia Academy activities during the school holidays. In 2012, the but sponsors runners to participate in various kids got to spend three days at the Kenaboi camp We provide the services of an in-house counsellor marathons locally and in the region, including the in Negeri Sembilan, famous for its whitewater to help staff manage work-related or personal Gold Coast International Marathon. In the belief rafting, returning home with some bruises but grievances. In addition, we have an employee that ‘running is from your heart and mind, not your plenty of great stories from the experience. The relations programme under which we offer feet’, the club has managed to convert a number of Allstars Junior Club aims to promote cultural coaching, mentoring, yoga and meditation classes, non-runners with proper training and coaching. understanding among children from different soft-skills classes like communication, values of life backgrounds as well as to instill a love for nature and leadership. In addition, AirAsia has sports clubs for badminton, and the environment. futsal, bowling, beach volleyball, football and Safety paintball. We even send our sporting personalities Industrial Relations and Compliance to compete internationally. For example, the We are committed to ensuring a safe work Allstars badminton team brought home honour The People Department liaises with government environment for our Allstars and are continuously and glory by becoming runners-up in the World offices and agencies, such as the Inland Revenue improving safety mechanisms at our premises. Airline Badminton Championship in 2011 and our Department and Labour Department, and advises During the year, we ensured all fire and exit doors AirAsia Football Club is registered under the Sports top Management on issues relating to labour laws are clearly marked and all fire extinguishers Council Malaysia Organisation. The AirAsia Allstar and the Employment Act to ensure harmonious replenished. We also reviewed maintenance work team from Thailand, meanwhile, took part in the industrial relations. We comply with all industrial being carried out at the AirAsia Academy. NBA 3X Thailand 2012 tournament. relations procedures and guidelines including those on taking disciplinary action and managing To further promote a healthy lifestyle, we run a grievances, ensuring our processes are constantly Health and Wellness programme which includes updated. Disciplinary issues are handled in a twice yearly free health checks (for eyes, bone friendly manner via engagement through coaching, density, cholesterol, blood pressure, etc) and mentoring, counselling and close monitoring. Allstars Yoga Retreat in Chiang Mai

Paintball tournament

Health check at Redfort

Health and Wellness Beach volleyball competition and day in Miri, Sarawak BBQ dinner in Langkawi, Kedah

Allstars at the Gold Coast International Marathon in Australia

Family Day in Kuala Gandah, Pahang

Allstars Junior Club at the Kenaboi camp in Negeri Sembilan

Allstars weekly bootcamp at AirAsia Academy

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Efficiency & the Environment The aviation industry contributes to about 2% of global CO2 emissions. AirAsia is fully cognisant of the fact and is committed to playing our part to reduce as far as possible the carbon footprint of all our actions and operations.

Our fleet is made up of 123 Airbus A320 aircraft 0.7% savings from fuel consumption. flight profile. However, other priorities such which represent the most fuel-efficient narrow- • Engine Thrust Rating - Airbus 320 aircraft as maximising take-off weight, the flex body aircraft in the world. What is more, our fleet is have two engine ratings (23.5K and 27K). temperature and passenger comfort while one of the youngest in the region, with an average Where possible, we use the lower thrust minimising the take-off speed often require age of just 3.5 years, lending us an edge not only rating to reduce our maintenance costs. higher flap settings. We therefore select the in terms of fuel efficiency but also ensuring that • Paint on Livery – We try to optimise the most appropriate flap setting for each take- we meet international standards on noise pollution. amount of paint used on our special livery to off. With an additional 357 aircraft to be delivered in reduce aircraft weight. • Auxillary Power Units (APUs) – These phases from 2013 till 2026, we will be in a position • Water Load – We optimise the volume of supply energy for air-conditioning and other to replace our older aircraft from year 2017 water carried on-board to reduce the weight requirements prior to take-off. By reducing onwards thus maintain the high standards already of our aircraft. Our policy is to fill our water the use of APU, we have been able to reduce achieved. tanks, which have a capacity of 200 litres fuel consumption by approximately 35%. (200kg), 50% for flights up to two hours • Aircraft Speed – We ensure our aircraft take Emphasis on efficiency at AirAsia is such that flights and 75% for flights longer than two off at the optimal speed and subsequently we have a department dedicated to enhancing hours. maintain optimal acceleration until they attain efficiency levels of all aspects of our operations. • Cost Index – We strike the optimum trade- cruising speed. This department works closely with GE Aviation’s off between cost of time (crew costs, • Idle Reverse – We use idle reverse on Performance-Based Navigation and Fuel & Carbon engineering costs and other parameters landing instead of full reverse to reduce fuel Solutions teams to further fine-tune our operations that are influenced by flight time) and the consumption and prolong engine life. This is with highly sophisticated systems. Although our cost of fuel by flying at greater speeds. It is able to save 10-15kg of fuel per landing. fuel consumption is already among the lowest in sometimes more cost-effective to fly faster, • One-Engine Taxi – this is described in Case the region/world our objective is to reduce our fuel burning more fuel, because of a high cost of Study 1 consumption by a further 3% in the short term. time. • Required Navigation Performance • Tankering Fuel – There are occasions when Authorisation Required (RNP-AR) – this is Among the initiatives we have taken to increase it is more cost-effective to carry more fuel described in Case Study 2 our fuel efficiency are: on-board than is necessary, for example • Sharklet Wingtips – this is described in Case when the price of fuel at the destination is Study 3 • Regular Engine Wash – Clean engines are significantly higher than the price at the point more fuel-efficient and increase the interval of departure. We therefore strike an optimum Meanwhile, we are seeking approval from the between engine overhauls. AirAsia Berhad level of fuel carried to achieve the greatest Department of Civil Aviation to replace physical and Thai AirAsia perform engine washes cost-efficiency. manuals on-board with online systems, as this every 750 hours, while Indonesia AirAsia and • Flap Setting - The lowest flap setting at would induce fuel savings of US$2,742 per aircraft Philippines’ AirAsia carry out washes every departure produces the least drag, so gives per month. 1,500 hours. These initiatives afford us 0.5- the lowest fuel burn, lowest noise and best Case Study 1 One Engine Taxi Case Study 3 Cost-effective & Safer Approach Procedures All Airbus A320 aircraft are fitted with two engines, however both need not be used all In another first, AirAsia in collaboration with the the time. For example, the thrust required for Department of Civil Aviation Malaysia and GE Aviation our aircraft to taxi can be achieved from the is working on the Required Navigation Performance Efficiency & the Environment use of only one engine. Hence in 2012, we Authorisation Required (RNP-AR) approach implemented a One-Engine Taxi procedure, throughout our local route network. This entails meaning we operate with only one engine shortening the flight path of aircraft when coming while taxiing our aircraft to the parking stand to land, thus reducing flight time and fuel burn. In after landing and having vacated the runway. terrain-challenged airports, the high accuracy satellite This saves us an average of 41 litres of fuel navigation equipment installed as part of the RNP-AR per flight, decreases engine maintenance will improve safety margins, providing precise lateral costs and contributes to a reduction in noise and vertical arrival and missed approach guidance. pollution. We are now working with the GE We expect the airports in Kuching and Penang to team to implement the same procedure be operationally ready with these procedures by before take-off while ensuring that safety is mid-2013. Approach procedures for the rest of our never compromised. 15-strong local airport network are being designed and are expected to be approved and rolled out over the next three years. A preliminary review of both Kuching and Penang airports showed potential track miles Environmental Management System savings of up to 44km and 24km respectively.

To supplement the fuel efficiency of our flight operations, AirAsia is working towards enhancing our on-ground systems to create greater energy efficiencies in the workplace, reduce waste of resources such as paper and water and recycle discarded items.

We are looking to be ISO 14001 certified in the near term hence will be putting in place a comprehensive Environmental Management System (EMS) to serve as a framework for systematic, planned and documented procedures. The EMS will be fully integrated into all our operations to ensure minimal impact on the environment. Case Study 2 Via the EMS, sufficient resources will be allocated to Sharklet wingtips manage environmental concerns, responsibilities will be assigned to relevant personnel and the appropriate In 2012, AirAsia was the first airline in the world to procedures and processes will be implemented and take delivery of an Airbus A320 aircraft equipped with continuously monitored. We expect to implement an EMS Sharklet wingtips, which reduce fuel burn and emissions upon our move to our new base at KLIA 2, latest in 2014. by improving the aerodynamics of the aircraft. With Sharklets, we can either add about 100 nautical miles The sustainability initiatives reported in this section to a flight or increase our payload by up to 450kg. In are ongoing measures, which we intend to expand and other words, it allows us to operate to more distant improve upon as they do not only add stakeholder value destinations while ensuring our payload capability is not but also bring us long-term business value. In 2013, compromised. It also saves us an average of 4% in fuel AirAsia produced a Sustainability Policy which will guide consumption per flight and 2% in engine maintenance our programmes and help them evolve. Based on this, costs per annum. Convinced of the benefits of Sharklets, we look forward to reporting greater progress in our we are ensuring that all future deliveries of Airbus A320 Community, Workplace, Marketplace and Environment aircraft will be fitted with the efficient wingtip design. We initiatives in our subsequent reports. may also retrofit our older aircraft with the wingtips to leverage on its fuel-saving capabilities. 175 ad a Berh AirAsi s 176& eportInitiative 2012al Rey Annu K th Grow wth

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Our Safety Commitment At AirAsia, our Safety Management System is not just an add-on but is central to our business process. Throughout 2012, our commitment to risk assessment and mitigation via this Safety Management System helped us to identify safety hazards and address these before they could escalate into incidents or accidents.

The critical safety functions of senior management are in the areas of strategy and leadership. Senior management provide a vision for safety management and the resources required to maintain our targeted level of safety. Meanwhile, all staff are aware that the health and safety of the organisation is everyone’s responsibility. Our Safety Management System is built on a sound and SAFETY POLICY STATEMENT just reporting framework, which ensures that any hazard or safety deficiency detected is brought to the attention Safety is given top priority in all of our activities. We are of those who have the authority to make changes. committed to developing, implementing, maintaining Unusual trends detected on Flight Data, for example, and improving our safety strategy, management systems are analysed and brought to the attention of the Flight and processes to ensure that all our aviation activities Operations Management so that prompt corrective are undertaken with balanced resource allocation, aimed action can be taken. Flight crew concerned will be at achieving the highest level of safety performance and consulted, and new procedures may be introduced to meeting the highest international safety standards. address previously unknown weak points or areas of uncertainty. All levels of management are accountable for the delivery of the highest level of safety performance, I pledge that no disciplinary action will be taken against starting with the Chief Executive Officer. any employee for reporting a safety hazard or concern to this Company’s management. I pledge also that no Our commitment is to: member of staff will be asked to compromise on our safety standards to ‘get the job done’. a) Develop and embed a safety culture in all our aviation activities that recognises the importance Our approach to safety further ensures that authority and value of effective aviation safety management and accountability co-exist. An essential component and acknowledges at all times that safety is of AirAsia’s Safety Management System is employee paramount. training. We train our employees so they are able to b) Clearly define for all staff their countabilityac and perform their tasks in a safe and efficient manner. responsibility for the development and delivery of Training modules are continuously updated and aviation safety strategies and performance. refreshed to ensure that all personnel, including c) Ensure that all staff are provided with adequate flight crew, are able to manage all possible scenarios, and appropriate aviation safety information and with added emphasis placed on safety manoeuvres training, are competent in safety matters and are or approaches which have been seen to be quite only allocated tasks commensurate with their skills. challenging. d) Establish and implement a hazard identification and risk management process to minimise the risks Medical cases that have occurred are shared with the associated with aircraft operations to a point that cabin crew during classes and the importance of first is as low as reasonably practicable/achievable, aid is emphasised, while ensuring medical kits on board and conduct safety reviews to ensure that relevant aircraft are always adequate. Incidents and accidents are action is taken. also shared with ground employees during training to e) Ensure that sufficient skilled and ainedtr resources allow them to understand their role in preventing such are always available to implement safety incidents. strategies, policies and processes. f) Establish and measure our safety performance It is management’s responsibility to make available against realistic objectives and/or targets. and carry out this training, while it is the employee’s g) Ensure that the externally supplied systems and responsibility to then follow all prescribed safe work services that may have an impact on the safety of practices. There is further always an open and active our operations meet appropriate safety standards. channel for discussing and reporting safety matters. h) Actively develop and improve our safety processes to conform to world-class standards while The ultimate responsibility for safety in the company complying with and, wherever possible, exceeding rests with me as the Chief Executive Officer/Accountable legislative and regulatory requirements and Manager. Meanwhile, the responsibility for making our standards. operations safer for everyone lies with each one of us – i) Foster and encourage the maximum level of from heads of department and/or managers to front-line reporting and transparency with non-punitive employees. safety/hazard reporting and by nurturing a just culture in the airline. Each head of department and/or manager is responsible for ensuring a safe work environment in his or her area of responsibility and, through oversight from the Safety Department, is held accountable to ensure that all reasonable steps are taken to prevent incidents and accidents. Aireen Omar We are committed to ensuring that safety excellence Chief Executive Officer continues to be an integral part of our day-to-day aviation activities, as we realise this is crucial to the sustainability of our business. Safety values are at the core of this Company, underlining our commitment to providing our employees and guests with the safest possible environment. 177

Reports & Financial Statement ther Information O Analysis of Shareholdings Contents 296 List of Top 30 Shareholders 298 List of Properties Held ountability 300 Acc Statement on Corporate Governance Group Directory 301 182 Audit Committee Report Glossary 304 189 Statement on Risk Management and Form of Proxy

192 Internal Control Additional Compliance Information 194 s And Financial Statement ReporDirectors’t Report 198 Income Statements 202 Statements of Comprehensive Income 203 Balance Sheets 204 Consolidated Statement of Changes In 206 Equity Company Statement of Changes In Equity 208 Cash Flow Statements 210 Notes to the Financial Statements 213 Supplementary Information 291 Statement by Directors 292 Statutory Declaration 293 Independent Auditors’ Report 294

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ACCOUNTABILITY Statement on Corporate Governance

The Board of Directors of AirAsia is committed in ensuring the highest standards of corporate governance are applied throughout the Group. Save as disclosed otherwise, the Board considers that it has complied throughout the year under review with the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2012 (“the Code”), Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) (“MMLR”) and Corporate Governance Guide: Towards Boardroom Excellence (“CG Guide”). The following sections explain how the Company applies the principles and supporting principles of the Code, MMLR and CG Guide.

A. Directors Board Balance and Meetings The Board of Directors consists of nine (9) Members, the Roles and Responsibilities of the Board details are given on pages 52 to 69 of this Annual Report. The Board retains full and effective control over the One (1) of the Board Member is the Non-Executive affairs of the Company and the Group and has assumed Chairman, one (1) is the Chief Executive Officer and the following to ensure the effectiveness of the Board Executive Director and seven (7) are Non-Executive and to discharge its fiduciary and leadership functions: Directors. Four (4) of the Non-Executive Directors fulfil the criteria of independence as defined in the MMLR. heT • Reviewing and adopting a strategic plan for the high proportion of Independent Non-Executive Directors Company; (more than one-third) provides for effective check and • Approves the Company’s annual budget and carries balance in the functioning of the Board and reflects out periodic review of the achievements against AirAsia’s commitment to uphold excellent corporate business targets; governance. • Identifying principal risks and to ensure implementation of appropriate internal control The Board has identified Dato’ Mohamed Khadar Bin system and mitigation measures to manage these Merican, the Independent Non-Executive Director and risks; the Chairman of the Nomination Committee as the Senior • Overseeing and evaluating the conduct of the Independent Non-Executive Director to whom concerns Company’s business; of shareholders and other stakeholders may be conveyed. • Succession planning; • Developing and implementing of an investor Dato’ Leong Sonny @ Leong Khee Seong has served the relations program; and Board as an Independent Non-Executive Director of the • Reviewing adequacy and integrity of the Company for a cumulative term of approximately nine (9) Company’s management information and system of years and he has expressed his intention for not seeking internal controls. for the shareholders’ approval to be re-appointed as a Director of the Company at the forthcoming Annual General Meeting (“AGM”) of the Company. Mr. Conor Mc Carthy, the Non-Independent Non- Chairman, even though he is not an independent director Executive Director of the Company who is due for re- but he is a non-executive director of the Company who election at the forthcoming AGM pursuant to Article 124 is not involved in the Company’s day-to-day operations. of the Company’s Articles of Association has expressed With the retirement of both Dato’ Leong Sonny @ Leong his intention for not seeking for the shareholders’ Khee Seong and Mr. Conor Mc Carthy, the Company approval for his re-election. would endeavour to nominate and appoint suitable replacements. Dato’ Fam Lee Ee has served the Board as an Independent Non-Executive Director of the Company The roles of the Chairman and the Chief Executive for a cumulative term of approximately nine (9) years. Officer (“CEO”) are separate with a clear division The Board has recommended him to continue to act as of responsibility between them as stipulated in the an Independent Non-Executive Director based on the Board Charter which can be downloaded from the following justifications: Company’s website. This segregation of duties ensures an appropriate balance of role, responsibility and (a) He has fulfilled the criteria under the definition of accountability at the Board level, such that no one Independent Director as stated in the MMLR, and individual has unfetted powers of decision. thus, he would be able to function as a check and balance, bring an element of objectivity to the The size, balance and composition of the Board support Board; the Board’s role, which is to determine the long term (b) He has vast experience in a diverse range of direction and strategy of the Group, create value for businesses and legal matters and therefore shareholders, monitor the achievement of business would be able to provide constructive opinion; objectives, ensure that good corporate governance is he exercises independent judgement and has the practised and to ensure that the Group meet its other ability to act in the best interest of the Company; responsibilities to its shareholders, other stakeholders (c) He has devoted sufficient time and attention to his and guests. professional obligations for informed and balanced decision making; The Non-Executive Directors are persons of high (d) He has continued to exercise his independence and calibre and integrity, and they collectively possess due care during his tenure as an Independent Non- rich experience primarily in finance, and private sector Executive Director of the Company and carried out enterprises and bring wide and varied commercial his professional duties in the best interest of the experience to Board and Committee deliberations. The Company and shareholders; and Non-Executive Directors devote sufficient time and (e) He has shown great integrity of independence and attention as necessary in order to perform their duties. had not enter into any related party transaction Other professional commitments of the Non-Executive with the Company. Directors are provided in their biographies on pages 52 to 69 of this Annual Report. The Board requires that The Company observes the requirements of the Code all Independent Directors are independent in character to have majority independent directors in the event the and judgment who do not participate in the day-to- Chairman is not an independent Director of the Company. day management of the Company and do not involve The Nomination Committee had deliberated the matter themselves in business transactions or relationships with and viewed that the Company would need more time to the Group, in order not to compromise their objectivity. comply with this recommendation as the Board’s size is small at the moment. The Board viewed that the Board’s 183 ad a Berh AirAsi 184

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ACCOUNTABILITY Statement on Corporate Governance

The Company recognises and embraces the During the financial year ended 31 December 2012, the Board of Directors held a total of ten (10) benefits of having a diverse Board and sees meetings and the details of Directors’ attendances are set out below: increasing diversity at Board level as an essential element in maintaining its competitive advantage. Name no of Meetings Attended Our diverse Board includes and makes good use of differences in skills, regional and industry Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar 10 experience, background, gender and other Tan Sri Dr Anthony Francis Fernandes 10 attributes of Directors. This effort could be evidenced by the appointment of Cik Aireen Dato’ Kamarudin bin Meranun 9 Omar as the Chief Executive Officer and Executive Director of the Company in July 2012. Besides this, Conor Mc Carthy 9 the Company maintains a good mix of diversity in Dato’ Leong Sonny @ Leong Khee Seong 10 the senior management of the Company. Dato’ Fam Lee Ee 10 The Board, through the Nomination Committee Dato’ Mohamed Khadar bin Merican 8 will take steps to ensure that women candidates are sought as part of its recruitment exercise. Datuk Mohd Omar bin Mustapha 8 Selection of women candidates to join the Board Tan Sri Mohamed Azman bin Yahya 2Note 1 will be, in part, dependent on the pool of women candidates with the necessary skills, knowledge Aireen Omar 4Note 2 and experience. The ultimate decision will be based on merit and contributions the candidate Note 1 : Tan Sri Mohamed Azman bin Yahya resigned on 30 April 2012 brings to the Board. Note 2 : Aireen Omar was appointed on 1 July 2012

The Nomination Committee also reviews the Supply of Information composition of the Board and the Board’s Prior to the Board Meetings, all Directors will receive the agenda and a set of Board papers containing committees annually. During the year under review, information for deliberation at the Board Meetings. This is to accord sufficient time for the Directors the Board had conducted the assessments on the to review the Board papers and seek clarifications that they may require from the Management or performance of the Board and Board’s committees the Company Secretary. Urgent papers may be presented and tabled at the Board meetings under and individual director self evaluation. During the supplemental agenda. The Board meeting papers are presented in a concise and comprehensive format. financial year, the Nomination Committee had also Board meeting papers tabled to Directors include progress reports on the Group’s business operations; reviewed and assessed the independence of the detailed information on business propositions; quarterly and annual financial statements, corporate Independent Directors of the Company. proposals including where relevant, supporting documents such as risk evaluations and professional advice from solicitors or advisers and report on the directors’ dealings in securities, if any. The Company Board meetings for each financial year are Secretary ensures that all Board meetings are properly convened, and that accurate and proper records scheduled well ahead before the end of the of the proceedings and resolutions passed are recorded and maintained in the statutory register at the preceding financial year so that the Directors can registered office of the Company. plan accordingly and fit the year’s Board meetings into their respective schedules. The Directors will declare immediately to the Board should they be interested in any transaction to be entered into directly or indirectly by the Company. An interested Director will abstain from all The Board holds regular meetings of no less than deliberations and voting on the said transaction. In the event that shareholders’ approval is required for a five (5) times a year. Special Board meetings may corporate proposal, the interested Director, if he is a shareholder as well, shall abstain from voting on the be convened as and when necessary to consider resolution pertaining to the corporate proposal and ensure person connected with them similarly abstain urgent proposals or matters that require the from voting on the same resolution. Board’s expeditious review or consideration. As a Group practice, any Director who wishes to seek independent professional advice in the furtherance The Board maintains a formal schedule of matters of his duties may do so at the Group’s expense. Directors have access to all information and records of specifically reserved for the Board’s decision the Group and also the advice and services of the Company Secretary, who also serve in that capacity to ensure that the direction and control of the in the various Board Committees. The Company Secretary also serves notice to Directors on the closed Company is firmly in its hands. period for trading in AirAsia Berhad’s shares, in Name Programmes accordance with the black-out periods stated in Chapter 14 on Dealings in Securities of the MMLR. Dato’ Abdel Aziz @ • 4th Annual Corporate Governance Summit Kuala Lumpur. Abdul Aziz bin Abu Bakar Directors’ Code of Ethics The Directors observe the Company Directors’ Tan Sri Dr Anthony Francis Fernandes • Invest Asean Code of Ethics established by the Companies • Credit Suisse Conference Commission of Malaysia in furtherance of their • Leadership and Education Seminar duties. • Sabah International Luncheon Talk

Appointments to the Board Dato’ Kamarudin bin Meranun • CIMB ASEAN Investor Conference The Group has implemented procedures for • JP Morgan Investor Roadshow the nomination and election of Directors via • Credit Suisse Investor Conference the Nomination Committee. The Nomination • CIMB ASEAN Conference Committee will assess the nominee(s) for • Sabah International Luncheon Talk directorship and Board Committee membership and thereupon submitting their recommendation Dato’ Leong Sonny @ Leong Khee Seong • FIDE (Financial Institutions Directors Education) to the Board for decision. Programme on Board Stimulation Exercise conducted by ICLIF Leadership and Governance Centre The Company Secretary will ensure that all • FIDE Programme on Risk Management Programme - appointments are properly made, that all Banking information necessary is obtained, as well as all legal and regulatory obligations are met. Dato’ Fam Lee Ee • National Entrepreneur Convention organised by Great Vision Group Directors’ Training • Malaysian Code on Corporate Governance 2012 and All the Directors have attended the Mandatory changes to Listing Requirements of Bursa Malaysia Accreditation Program prescribed by Bursa Securities Berhad organised by BAR Council Malaysia Malaysia. Dato’ Mohamed Khadar bin Merican • FIDE Elective Program: Private Equity Program Directors are regularly updated on the Group’s • Competition Act 2010 businesses and the competitive and regulatory • Managing Banking Operations And Innovation environment in which they operate. Directors, • The Framework Of Shariah Compliance And Governance especially newly appointed ones, are encouraged • Internal Capital Adequacy Assessment Process Directors to visit the Company’s operating centre to have an Workshop insight on the Company’s operations which could • ICLIF Strategic Development Program assist the Board to make effective decisions. Datuk Mohd Omar bin Mustapha • 25th World Gas Conference For the year under review, the Directors had continuingly kept abreast with the development in Aireen Omar • Barclays Asia Pacific Debt Capital Markets Forum the market place with the aim of enhancing their • CLSA Conference skills, knowledge and experience. • JP Morgan Investor Roadshow • CIMB ASEAN Conference Among the training programmes, seminars and • Ascend Finance Forum: Tokyo 2012 briefings attended during the year were as follows: • 13th Annual Asia-Pacific Air Finance

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ACCOUNTABILITY Statement on Corporate Governance

During the financial year under review, Mr. Conor The Board has delegated the responsibility of • To review the Board’s succession planning. Mc Carthy did not attend any training program reviewing the effectiveness of risk management • To review and determine the appropriate as he has not identified any training courses that to the Audit Committee. The Audit Committee training programmes for the Board as a were of particular benefit to his role as a Director also reviews the risk management framework, whole. of AirAsia where he has served for the past 12 processes and its reports. years. The Board, through the Nomination Committee, Further information on the composition, summary had carried out review on the composition of the All Directors were also updated by the Company terms of reference and other information relating Board and satisfied that the size and composition Secretary on changes to the MMLR and relevant to the Audit Committee are set out on pages 189 of the Board is adequate with appropriate guidelines on the regulatory and statutory to 191 of this Annual Report. mix of knowledge, skills, attributes and core requirements and external auditors on the competencies. changes to the financial reporting standards and The Nomination Committee comprises four Non- tax related matters. Executive Directors, namely: The Remuneration Committee comprises three Independent Non-Executive Directors namely: Re-election of Directors Chairman : Dato’ Mohamed Khadar bin Merican The Articles of Association of the Company (Senior Independent Non-Executive Chairman : Datuk Mohd Omar bin Mustapha provide that at least one-third of the Directors Director) (Independent Non-Executive Director) are subject to retirement by rotation at each AGM and that all Directors shall retire once in every Members : Dato’ Abdel Aziz @ Abdul Aziz bin Members : Dato’ Leong Sonny @ three years, and are eligible to offer themselves Abu Bakar leong Khee Seong for re-election. The Articles of Association also (Non-Independent Non-Executive (Independent Non-Executive Director) provide that a Director who is appointed by the Director) Dato’ Fam Lee Ee Board in the course of the year shall be subject to Dato’ Fam Lee Ee (Independent Non-Executive Director) re-election at the next AGM to be held following (Independent Non-Executive Director) his appointment. Directors over seventy years of Datuk Mohd Omar bin Mustapha The primary responsibility of the Remuneration age are required to submit themselves for re- (Independent Non-Executive Director) Committee in accordance with its terms of appointment annually in accordance with Section reference is to assist the Board with the following 129(6) of the Companies Act, 1965. The primary responsibility of the Nomination functions: Committee in accordance with its terms of Board Committees reference is to assist the Board with the following • To review and to consider the remuneration To assist the Board in discharging its duties, functions: of Executive Directors which is in accordance various Board Committees have been established. with the skill, experience and expertise they The functions and terms of reference are clearly • To assess and recommend new nominees possess and make recommendation to the defined and, where applicable, comply with the for appointment to the Board and Board Board on the remuneration packages of recommendations of the Code. Committees (the ultimate decision as Executive Directors. to whom shall be nominated should be • To provide an objective and independent The Audit Committee comprises three the responsibility of the full Board after assessment of the benefits granted to the Independent Non-Executive Directors. considering the recommendations of such a Executive Directors. Committee). • To conduct continued assessment of The Chairman of the Audit Committee would • To review the required mix skills and individual Executive Directors to ensure that inform the Directors at Board meetings, of any experience and other qualities, including remuneration is directly related to corporate salient matters raised at the Audit Committee core competencies which the Non-Executive and individual performance. meetings and which require the Board’s notice or Directors should bring to the Board. • Annual review of the overall remuneration direction. • To assess the effectiveness of the Board as a policy for Directors for recommendation to whole, the committees of the Board and the the Board. contribution of each individual Director. The Company maintains transparent procedures in B. Directors Remuneration 6. Directors’ share options determining the remuneration policy for Directors. There was no movement in Directors’ share Executive Directors play no part in decisions on The remuneration package comprises the options during the year ended 31 December their own remuneration. The determination of following elements: 2012 except that Dato’ Kamarudin bin remuneration packages of non-executive Directors Meranun had fully exercised his options for is a matter for the Board as a whole. All the 1. Fee 600,000 ordinary shares of RM0.10 each in individual Directors concerned abstained from The fees payable to each of the Non- the Company. discussing their own remuneration. Executive Directors for their services on the Board are based on the basic Board fee and Details of the Directors’ remuneration The Safety Review Board was established in their respective additional responsibilities are set out in Note 5 of the Audited August 2005 with the purpose of providing Board on the Board’s committees during the Financial Statements on pages 229 to 230 level oversight and input to the management of year recommended by the Board for final of this Annual Report. Whilst the Code Safety within AirAsia’s operations. The Board approval by shareholders of the Company at has prescribed for individual disclosure appoints the Chairman of the Committee the AGM. packages, the Board is of the view that the and a meeting is held each quarter to review transparency and accountability aspects progress and trends in relation to Flight Safety & 2. basic salary of Corporate Governance in respect of the Airworthiness, Incident Reports, Investigations and The basic salary for each Executive Director Directors’ remuneration are appropriately recommendations and Flight Data Analysis and is recommended by the Remuneration and adequately addressed by the band Recommendations. The Committee comprises two Committee and approved by the Board, disclosure as disclosed in the said Note 5. Non-Executive Directors, namely: taking into account the performance of the individual, the inflation price index and Chairman : Mr. Conor Mc Carthy information from independent sources on C. Shareholders (Non-Independent Non-Executive the rates of salary for similar positions in Director) other comparable companies internationally. Investor Relations The Company is committed to maintaining good Member : Dato’ Mohamed Khadar bin Merican 3. bonus scheme communications with shareholders and investors. (Independent Non-Executive Director) The Group operates a bonus scheme for Communication is facilitated by a number of all employees, including the Executive formal channels used to inform shareholders about and the other members include relevant Directors. The criteria for the scheme the performance of the Group. These include operations safety and security specialists from are dependent on various performance the Annual Report and Financial Statements and AirAsia and from our affiliates in Thailand, measures of the Group, together with an announcements made through Bursa Malaysia, Indonesia, Philippines and Japan. A report is assessment of each individual’s performance as well as through the AGM. A Shareholders’ provided to Board each Quarter. during the period. The bonus for the Communication Policy is available on the Executive Directors is recommended by the Company’s website. The Employee Share Option Scheme (“ESOS”) Remuneration Committee and approved by Committee comprises of Tan Sri Dr. Anthony the Board. Members of senior management are directly Francis Fernandes, Dato’ Kamarudin Bin Meranun involved in investor relations through periodic and Mr. Andrew Robert Littledale, the Chief 4. benefits-in-kind roadshows and investor briefings in the country Financial Officer of the Company. The ESOS Other customary benefits such( as private and abroad with financial analysts, institutional Committee was established to administer medical care, travel coupons, etc.) are made shareholders and fund managers. the ESOS of the Group in accordance with available as appropriate. the objectives and regulations thereof and to Reports, announcements and presentations determine the participation eligibility, option 5. Service contract given at appropriate intervals to representatives offers and share allocations and to attend to such The CEO has a three-year service contract of the investment community are also available other matters as may be required. with AirAsia. for download at the Group’s website at www. airasia.com. Shareholders may obtain the Company’s announcements on its website or via the Bursa Malaysia’s website at “http://www.bursamalaysia.com”. 187 ad a Berh AirAsi 188

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ACCOUNTABILITY Statement on Corporate Governance

Any queries or concerns regarding the Group may Timely release of announcements on quarterly Code of Conduct be directed to the Investor Relations Department financial reports reflects the Board’s commitment The Company had formalised ethical standards at [email protected]. to provide transparent and up-to-date disclosures through a code of conduct and will ensure its of the performance of the Company and its group compliance. The Code of Conduct is published on Annual General Meeting of subsidiaries. the Company’s website. Given the size and geographical diversity of our shareholder base, the AGM is another important The Directors are also required by the Companies Whistleblowing Program forum for shareholder interaction. All shareholders Act, 1965 to prepare the Group’s annual audited In order to improve the overall organisational are notified of the meeting together with a copy financial statements with all material disclosures effectiveness and to uphold the integrity of the of the Group’s Annual Report at least 21 days such that they are complete, accurate and Company in the eyes of the public, the Company before the meeting is held. in conformance with applicable accounting has updated the whistleblowing program during standards and rules and regulations. The Audit the year which acts as a formal communication At the AGM, the Group CEO and the CEO will Committee assists the Board in overseeing the channel where all stakeholders can communicate conduct a brief presentation on the Group’s financial reporting process. their concerns in cases where the Company’s performance for the year and future prospects. business conduct is deemed to be contrary to the The Chairman and all Board Committee chairmen Audit Committee and Internal Control Company’s common values. where possible will be present at the AGM to The Board’s governance policies include a process answer shareholders’ questions and hear their for the Board, through the Audit Committee to All concerns should be addressed to the Group views during the meeting. Shareholders are review regularly the effectiveness of the system of Head of Internal Audit who will then assess encouraged to participate in the proceedings and internal control as required by the Code. A report all concerns reported and recommend the engage with dialogue with the Board and Senior on the Audit Committee and its summary terms of appropriate action, and subsequently: Management. reference is presented on pages 189 to 191 of this Annual Report. • Compile all reports received and submit to Corporate Disclosure Policy and Procedures the Chairman of the Audit Committee; and AirAsia Berhad observed the continuing disclosure The Board has overall responsibility for the • Report to Management on behalf of obligation imposed upon a listed issuer by Bursa Group’s system of internal control, which the Audit Committee the results of the Malaysia. A Corporate Disclosure Policy and comprises a process for identifying, evaluating and investigation for further action. Procedures was approved by the Board, which managing the risks faced by the Group and for provides accurate, balanced, clear, timely and regularly reviewing its effectiveness in accordance All details pertaining to the name and position of complete disclosure of corporate information to with the Code. the whistleblower will be kept strictly confidential enable informed and orderly market decisions by throughout the investigation proceedings. investors. In this respect, the Company follows The Board confirms that this process was in place the disclosure guidelines and regulation of Bursa throughout the year under review and up to the Relationship with the External Auditors Malaysia’s CG Guide. date of approval of these financial statements. The Board, through the Audit Committee, has The primary aim is to operate a system which maintained appropriate, formal and transparent Material information will in all cases be is appropriate to the business and which can, relationship with the external auditors. The disseminated via Bursa Malaysia and other means. over time, increase shareholder value whilst Audit Committee meets the external auditors safeguarding the Group’s assets. The system is without the presence of management, whenever designed to manage, rather than eliminate, the necessary, and at least twice a year. Meetings with D. AcCCountability and Audit risk of failure to achieve business objectives and the external auditors are held to further discuss can only provide reasonable and not absolute the Group’s audit plans, audit findings, financial Financial Reporting assurance against material misstatement or loss. statements as well as to seek their professional The Board aims to ensure that the quarterly advice on other related matters. From time to reports, annual audited financial tatementss as The Statement of Risk Management and Internal time, the external auditors inform and update the well as the annual review of operations in the Control is set out in pages 192 to 193 of this Audit Committee on matters that may require Annual Report reflect full, fair and accurate Annual Report. their attention. recording and reporting of financial and business information in accordance with the MMLR of Bursa This statement is made in accordance with a Malaysia. resolution of the Board of Directors of AirAsia dated 24 April 2013. ACCOUNTABILITY Audit Committee Report

SUMMARY OF TERMS OF REFERENCE OF THE AUDIT • Review the internal audit reports and to ensure that COMMITTEE appropriate and prompt remedial action is taken by the Management; A. Composition • Review the internal audit reports relating to Group affiliates; The Committee shall comprise at least three non- • Review the appraisal or assessment of the executive directors appointed by the Board of Directors. performance of members of the internal audit All the members of the Committee must be non-executive function; directors, with a majority of them being independent • Approve the appointment or termination of the directors. All members of the Committee shall be Group Head of Internal Audit and senior staff financially literate and at least one member shall: members of Internal Audit; and • Take cognisance of resignations of internal audit (i) be a member of the Malaysian Institute of staff and the reason orf resigning. Accountants; or Risk Management (ii) if he is not a member of the Malaysian Institute • To develop and inculcate a risk awareness culture of Accountants, he must have at least 3 years of within the Groups; working experience and:- • To review risk management strategies, frameworks • he must have passed the examinations and policies of the Group to ensure key risks are specified in Part I of the 1st Schedule of the systematically identified, evaluated and highlighted; Accountants Act 1967; or • To ensure resources and systems are in place for • he must be a member of one of the risk management function; and associations of accountants specified in Part • To oversee specific risk management concerns II of the 1st Schedule of the Accountants Act raised by the business units. 1967; or External Auditor (iii) fulfils such other requirements as prescribed or • To consider the appointment of the external approved by the Exchange. auditor, the audit fees, any questions of resignation or dismissal of the external auditor; • To submit a copy of written representation or B. Roles and responsibility submission of external auditors’ resignation to the Exchange; The primary roles and responsibilities of the Committee • Monitor the effectiveness of the external auditors’ with regards to the AirAsia’s Group’s Internal Audit performance and their independence and function, risk management, external auditors, financial objectivity; reporting, related party transactions, annual reporting • To discuss with the external auditor before the and investigation are as follows: audit commences, the nature and scope of the audit, and ensure co-ordination where more than Internal Audit one audit firm is involved; • Mandate the internal audit function to report • Review major findings raised by the external auditors directly to the Committee; and Management’s responses, including the status of • Review the adequacy of the scope, functions, the previous audit recommendations; competency and resources of the internal audit function, and that it has the necessary independence and authority to carry out its work; 189 ad a Berh AirAsi 190

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ACCOUNTABILITY Audit Committee Report

• To discuss problems and reservations arising • have full, free and unrestricted access to the d) The Group Regional Head of Finance and the from the interim and final audits, and any Group and Company’s records, properties, Regional Head of Internal Audit of the Group matter the external auditor may wish to personnel and other resources; and the Company shall normally attend the discuss (in the absence of management • have full and unrestricted access to any meetings to assist in the deliberations and where necessary); and information regarding the Group and resolution of matters raised. However, at least • To provide a line of communication between Company; twice a year, the Committee shall meet with the Board and the external auditors. • have direct communication channels with the the External Auditors without the presence of external auditors and person(s) carrying out management. Financial Reporting the internal audit function; e) The Company Secretary shall act as Secretary To review the quarterly and year-end financial • be able to obtain independent professional or of the Committee. statements of the Group and Company, focusing other advice; and f) The Secretary of the Committee shall be particularly on: • convene meetings with the external auditors, entrusted to record all proceedings and internal auditors or both, excluding the minutes of all meetings of the Committee. • any change in accounting policies and attendance of other directors and employees g) The Committee at each Board Meeting will practices; of the Company, whenever deemed report a summary of significant matters • significant adjustments arising from the audit; necessary. resolutions. • litigation that could affect the results materially; Where the Committee is of the view that a matter The terms of reference summarised above were • the going concern assumption; and reported by it to the Board of directors has not revised and approved by the Board of Directors of • compliance with accounting standards and been satisfactorily resolved resulting in a breach AirAsia Berhad on 26th day of February 2013. other legal requirements. of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”), the Related Party Transactions Committee is authorised to promptly report such ACTIVITIES OF THE AUDIT COMMITTEE DURING To review any related party transactions and matters to the Exchange. THE YEAR conflict of interest situations. A summary of the activities performed by the Annual Report D. meetings Committee during the financial year ended 31 Report the Audit Committee’s activities for the December 2012 (“Financial Year”) is set out below. financial year. a) The Committee shall meet at least four (4) times a year. Composition of the Audit Committee and Investigation b) The quorum for an Audit Committee Attendance of meetings • To consider the major findings of internal Meeting shall be at least two (2) members. A total of ten (10) meetings and one (1) adjourned investigations and management’s response; The majority present must be Independent meeting were held for the Financial Year. The and Directors. members of the Committee together with the • To review the Company’s procedures for c) The External Auditor has the right to details of their attendance at the Committee detecting fraud and whistle blowing. appear and be heard at any meeting of the meetings held during the year were as follows: Committee. Other Matters To consider any other matters as directed by the Name Directorship No. of Meetings Board. attended

Dato’ Leong Khee Seong Independent Non-Executive Director 11 C. authority and powers of the Audit (Chairman of the Committee) Committee Dato’ Fam Lee Ee Independent Non-Executive Director 11 In carrying out its duties, an Audit Committee shall, at the cost of the Company: Dato’ Mohamed Khadar bin Merican Independent Non-Executive Director 11

• have authority to investigate any matter within its terms of reference; The Committee meets on a scheduled basis at least • The Committee was also updated by PwC The principal responsibility of IA is to undertake once in every two months. The Chief Executive on changes to the relevant guidelines on the regular and systematic reviews of the systems Officer, the Chief Financial Officer and the Group regulatory and statutory requirements. of internal controls, so as to provide reasonable Head of Internal Audit are invited to attend the • Deliberated and reported the results of the assurance that the systems continue to operate meetings to assist in the deliberations as and when annual audit to the Board of Directors. efficiently and effectively. The IA implements necessary. The External Auditors are also invited to • Met with the external auditor without the risk based auditing in establishing the strategic discuss their management letters, Audit Planning presence of management to discuss any and annual audit plan, being the main factor in Memorandum and other matters deemed relevant. matters that they may wish to present. determining the areas or units to be audited.

Internal Audit Employee Share Option Scheme The audits cover the review of the adequacy of risk • Approved the Group’s internal audit plan, • The Committee verified the allocation options management, the strength and effectiveness of scope and budget for the financial ear.y pursuant to the criteria disclosed to the the internal controls, compliance to both internal • Reviewed the results of internal audit employees of the Group and established and statutory requirement, governance and reports and monitor the implementation of pursuant to the Employee Share Option management efficiency, amongst others. Areas management action plans in addressing and Scheme for the Financial Year. for improvement and audit recommendations are resolving issues. forwarded to the management for attention and • Reviewed the adequacy and competencies of Financial Reporting further actions. Management is responsible to internal audit function to execute the annual • Reviewed and deliberated on the Quarterly ensure that corrective actions are implemented audit plan. Financial Announcements and Annual within the required time frame. The audit reports Audited Financial Statements prior to which provide the results of the audit conducted Risk Management submission to the Board of Directors for are submitted to the Audit Committee for review. • Reviewed and evaluated the Risk Management consideration and approval. Key control issues and recommendations are Framework and Policy. highlighted to enable the Committee to execute its • Reviewed the key risk profile for the Company. Related Party Transactions oversight function. • Reviewed the Statement on Risk Management • Reviewed the related party transactions and Internal Control and Audit Committee entered into by AirAsia Berhad Group in The Audit Committee reviews and approves the Report for inclusion in the 2012 Annual Report. conformity to the established procedures in IA’s human resource requirements to ensure adherence to the MMLR. that the function is adequately resourced with External Audit competent and proficient internal auditors. Total • The Committee reviewed operational costs of the Internal Audit department PricewaterhouseCoopers (“PwC”) overall INTERNAL AUDIT FUNCTION for 2012 was RM2,444,748. work plan and recommended to the Board their remuneration and terms of engagement AirAsia Group has a well established in-house as external auditors and considered in detail Internal Audit (“IA”) to assist the Board to oversee the results of the audit, PwC’s performance that Management has in place a sound risk and independence and the effectiveness of management, internal control and governance the overall audit process. The Committee system. The IA maintains its impartiality, recommended PwC’s re-appointment as proficiency and due professional care by having its auditors to the Board and this resolution will plans and reports directly under the purview of the be put to shareholders at the AGM. Committee. The function is also guided by its Audit • Reviewed updates on the introduction of Charter that provides for its independence and Financial Reporting Standards and how they reflects the roles, responsibilities, accountability will impact the Company and has monitored and scope of work of the department. The IA progress in meeting the new reporting reports functionally to Audit Committee and requirements. administratively to the Group Chief Executive Officer.

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ACCOUNTABILITY Statement on Risk Management & Internal Control

The Board remains committed to complying with the controls. The Board is informed of major issues on internal Malaysian Code on Corporate Governance 2012 (the controls, regulatory compliance and risk taking. Code) which “… requires listed companies to maintain a sound risk management framework and internal The Board has received assurance from the Chief control system to safeguard shareholders’ investment Executive Officer and the Chief Financial Officer that the and the Company’s assets” and guided by the Bursa Group’s risk management and internal control system Malaysia’s MMLR Paragraph 15.26 (b) and Statement is operating adequately and effectively, in all material on Risk Management & Internal Control: Guidelines for aspects, based on the risk management and internal Directors of Listed Issuer. The Board is pleased to issue control system of the Group. the following statement of risk management & internal control for the financial year ended 31 December 2012. The Board is of the view that the risk management and internal control system in place for the year under review is sound and adequate to safeguard the shareholders’ Responsibility investment, the interest of customers, regulators and employees and the Group’s assets. The Company aims to achieve the highest standards of professional conduct and ethics, to raise the bar on accountability and to govern itself in accordance to Integrating Risk Management with Internal the relevant regulations and laws. To achieve long term Control System shareholder value through responsible and sustainable growth, the Company has established and maintains an The Board continues to rely on the enterprise risk internal control system that incorporates various control management framework to manage its risks and to mechanisms at different levels throughout the Company. form the basis of the internal audit plan. Effective risk The Board of Directors is responsible for reviewing the management is particularly challenging as the Company effectiveness of these control mechanisms. Due to the operates in a rapidly changing environment. The process limitations inherent in any such system, this is designed of risk management is ongoing where the coverage to manage rather than eliminate risk and to provide includes the Group’s associated companies. Risk profiling reasonable but not absolute assurance against material and assessments for all business divisions and associated misstatement of management and financial information companies have been performed during the development and records or against financial losses or fraud. of the annual audit plan which was presented, deliberated and approved by the Audit Committee. The Group has in place an on-going process for identifying, evaluating, monitoring and managing The Board relies significantly on the Company’s internal significant risks that may materially affect the auditors to carry out audits of the various operating units achievement of corporate objectives. This process based on the risk-based approved audit plan. has been in place throughout the year and is regularly reviewed by the Board. Management is responsible for assisting the Board implement policies and procedures Key Risk Management & Internal Control on risk and control by identifying and assessing the Processes risks faced, and in the implementation of suitable remedial actions to enhance operational controls and risk The key processes that have been established in reviewing management. Indeed, the first level of assurance comes the adequacy and effectiveness of the Group’s risk from business operations which perform the day-to-day management and internal control system are described operational risk through comprehensive system of internal below: Risk Management to be audited is based on risk based audit functions. The Committees have the • The Board has delegated the responsibility methodology taking into consideration input authority to examine all matters within their of reviewing the effectiveness of risk of the senior management and the Board; scope and report to the Board with their management to the Audit Committee recommendations; and supported by the risk management function; • Management is responsible for ensuring that corrective actions to address control • Operational committees have also been • A written Risk Management Framework & weaknesses are implemented within established with appropriate empowerment Policy (“RMF&P”) is in place. The RMF&P a defined time frame. The status of to ensure effective management and outlines the Group’s underlying approach to implementation is monitored through follow- supervision of the Group’s core business risk and risk management, process, structure, up audits which are also reported to the operations. These committees include the tools etc. Subsequent changes to the RMF&P Audit Committee; Financial Risk Committee, Quality and would be reviewed and recommended by the On-Time Performance Committee where Audit Committee to the Board; • The conducts of internal audit work is meetings are held frequently to address governed by the Internal Audit Charter, emerging issues, concerns and mitigation • Effectiveness of the risk management system which is approved by the Audit Committee. action plans. is monitored and evaluated on an on-going The Audit Committee also reviews the basis through continuous monitoring and adequacy of scope, functions, competency Other Key Processes evaluation on the Group’s risk management and resources of the internal audit functions • Policies and procedures of core business system; and and that it has the necessary authority to processes are documented in a series carry out its work. The IA is also guided of Standard Operating Procedures and • Additionally, the Audit Committee reviews by the International Standards for the implemented throughout the Group. These and assesses the adequacy of these Professional Practice of Internal Auditing set policies and procedures are subject to risk management policies and ensure by the Institute of Internal Auditors; and regular reviews, updates and continuous infrastructure, resources and systems are in improvements to reflect the changing risks place for effective risk management. • The Audit Committee also reviews and and operational needs; considers matters relating to internal controls Internal Audit as highlighted by the external auditors in • Heads of Department present their annual • The Board has extended the responsibilities the course of their statutory audit of the budget, including financial and operating of the Audit Committee to include the Company’s financial statements. targets and capital expenditure plans for assessment of internal controls, through the approval of the Chief Executive Officer. the Internal Audit (“IA”) function. The Audit The Board and Operational Committees Group annual budget is prepared and tabled Committee, chaired by an independent • The Board has established an organisational for Board approval. These budgets and non-executive director reviews the internal structure with clearly defined lines of business plans are cascaded throughout the controls system and findings of the internal responsibilities, authority limits and organisation to ensure effective execution auditors and external auditors; accountability aligned to business and and follow through. Actual performance is operations requirements which support the compared against budget and reviewed by • The IA is an independent function that maintenance of a strong internal control the Board; and reports directly to the Audit Committee. environment; The IA assists the Committee and the Board • The Company has implemented a formal by performing regular and systematic • The Board has established the Board performance appraisal system for all levels of review of the internal controls, financial and Committees with clearly defined delegation employees. accounting matters, operational policies of responsibilities within the definition and procedures, and ensuring that internal of terms of reference and organisation The statement also caters for the state of internal controls are adequate to meet the Group’s structures. These committees include controls in material joint ventures and associated requirements. Audits are carried out on Remuneration Committee, Nomination companies. There was no material loss incurred as all units and stations, the frequency of Committee, Audit Committee and Safety a result of internal control weaknesses. which is determined by the level of risks Review Board which have been set up to assessed. The selection of auditable areas assist the Board to perform its oversight 193 ad a Berh AirAsi 194

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ACCOUNTABILITY Additional Compliance Information

The information set out below is disclosed in compliance with the MMLR of Bursa Malaysia:-

1. utiliSATION OF PROCEEDS FROM CORPORATE PROPOSAL There were no proceeds raised by the Company from corporate proposals during the financial year ended 31 December 2012.

2. SHARE BUY-BACK The Company does not have a scheme to buy-back its own shares.

3. optionS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED The Company did not issue any warrants or convertible securities during the financial year ended 31 December, 2012. The AirAsia ESOS came into effect on 1 September 2004. The details of the ESOS exercised are disclosed in pages 264 to 266 of the financial statements.

4. DEPOSITORY RECEIPT PROGRAMME The Company did not sponsor any depository receipt programme during the financial year ended 31 December 2012.

5. EMPLOoyee SHARE OPTION SCHEME (“ESOS”) The ESOS is the only share scheme of the Company in existence during the financial year ended 31 December 2012 approved by the shareholders on 7 June 2004. On 28 May 2009, the Company extended the duration of its ESOS which expired on 6 June 2009 for 5 years to 6 June 2014. The information of the ESOS are as follows:

During the financial year ended Since commencement of the ESOS on 31 December 2012 7 June 2004

Total number of options or shares granted - 93,168,000 Total number of options exercised or shares vested 1,806,000 64,875,500 Total options or shares outstanding 3,743,900 3,743,900

Granted to Directors and Chief Executive During the financial year ended Since commencement of the ESOS on 31 December 2012 7 June 2004

Aggregate options or shares granted - 1,200,000 Aggregate options exercised or shares vested 600,000 1,200,000 Aggregate options or shares outstanding - - Granted to Directors and senior management During the financial year ended Since commencement of the ESOS on 31 December 2012 7 June 2004

Aggregate maximum allocation in percentage - 50.0% Actual percentage granted - 1.29%

There were no options granted to the Non-Executive Directors pursuant to the ESOS since its commencement on 7 June 2004.

6. SANCTIONS AND/OR PENALTIES There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December 2012.

7. non-AUDIT FEES The amount of non-audit fees incurred for services rendered to the Company by the external auditors for the financial year ended 31 December 2012 were RM168,925 for tax advisory services.

8. VAaRIATION IN RESULTS There were no profit estimations, forecasts or projections made or released by the Company during the financial year ended 31 December 2012.

9. pROFIT GUARANTEE During the financial year ended 31 December 2012, the Group and the Company did not give any profit guarantee.

10. MATteRIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS There were no material contracts entered into by the Company and its subsidiaries involving directors and major shareholders’ interests still subsisting at the end of the financial year ended 31 December 2012.

11. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OF TRADING NATURE At the Extraordinary General Meeting (“EGM”) held on 21 June 2012, the Company had obtained a shareholders’ mandate to allow the Company and/or its subsidiaries to enter into recurrent related party transactions (“RRPTs”) of a revenue or trading nature.

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ACCOUNTABILITY Additional Compliance Information

The breakdown of the aggregate value of the RRPTs entered into by the Group during the financial year is as follows:

Transacting Parties Nature of RRPT Class and relationship of the actual value (RM) Related Parties

Revenue/income

1. AirAsia X Berhad (“AAX”) Provision of the following range of services by Interested Directors and Major 6,035,000 our Company to AAX: Shareholders Tan Sri Dr. Anthony Francis (a) AirAsia travel insurance Fernandes (b) Commercial Dato’ Kamarudin Bin Meranun - Sales and distribution - Sales support Interested Major Shareholder - Provision of sales offices, airport sales Tune Air Sdn Bhd counter and use of our Company’s authorised travel agents - Payment channel and E-Channel - Branding and Creative • Protection of brand to ensure proper public perception is built • Manage communication imagery, sponsorships (e.g. sports and youth marketing) and commercial branding • Creative includes graphic designs supporting branding activities - Manage, plan, build and develop airasia.com website (c) Innovation, Commercial and Technology - Involves all services related to information technology (d) Treasury - Fuel procurement - Fuel hedging (e) Audit and consulting services - Credit card fraud control unit - Internal audit - Corporate integrity (f) Security services (g) Ad-Hoc engineering services (h) Flight operations – pilot support

2. AAX Provision of the rights by our Company to AAX as Interested Directors and Major 8,524,606 a licensee to operate scheduled air services under Shareholders the trade name and livery of AirAsia Tan Sri Dr. Anthony Francis Fernandes Dato’ Kamarudin Bin Meranun

Interested Major Shareholder Tune Air Sdn Bhd Transacting Parties Nature of RRPT Class and relationship of the actual value (RM) Related Parties

Revenue/income (continued)

3. Tune Ins Holdings Berhad (“TIH”) Provision of the right to access our Company’s Interested Directors and Major 302,838 customer database by our Company to TIH to Shareholders conduct telesales marketing on TIH’s and/or third Tan Sri Dr. Anthony Francis party insurance products and the provision of Fernandes management services by TIH to our Company’s Dato’ Kamarudin Bin Meranun travel insurance business Interested Major Shareholder Tune Air Sdn Bhd

4. Tune Insurance Malaysia Berhad Provision of travel insurance to our customers Interested Directors and Major 11,138,510 (formerly known as Oriental Capital for journeys originated from Malaysia resulting in Shareholders Assurance Berhad) (“TIMB”) underwriting commission received by TIH through Tan Sri Dr. Anthony Francis TIMB Fernandes Dato’ Kamarudin Bin Meranun

Interested Major Shareholder Tune Air Sdn Bhd

5. Think Big Digital Sdn Bhd Selling of loyalty points to Think Big Digital Interested Directors and Major Nil Sdn Bhd, who operates and manages a loyalty Shareholders program branded as the BIG Loyalty Program Tan Sri Dr. Anthony Francis Fernandes Dato’ Kamarudin Bin Meranun

Expense

6. 1Malaysia Racing Team Sdn Bhd Provision of sponsorship by our Company to Interested Directors and Major GBP1,200,000 (“Caterham F1”) Caterham F1 for the duration of the 2012 F1 racing Shareholders season and the Caterham F1 Driver Development Tan Sri Dr. Anthony Francis Program Fernandes Dato’ Kamarudin Bin Meranun

7. QPR Holdings Limited Provision of full shirt sponsorship by our Interested Directors and Major GBP2,500,000 Company to Queen Park Ranger Football Club in Shareholders the Barclays Premier League Tan Sri Dr. Anthony Francis Fernandes Dato’ Kamarudin Bin Meranun

The shareholdings of the interested Directors and interested Major Shareholders in the Company as at 16 April 2013 are as follows:

<------Direct ------> <------Indirect ------> No. of Shares % No. of Shares %

Interested Directors Tan Sri Dr. Anthony Francis Fernandes 3,227,010 0.12 640,608,382* 23.04 Dato’ Kamarudin Bin Meranun 2,292,900 0.08 640,608,382* 23.04

Interested Major Shareholder Tune Air Sdn Bhd 640,608,382 23.04 - -

Note: * Deemed interested via their interests in Tune Air Sdn Bhd, being the Major Shareholder of our Company pursuant to Section 6A of the Companies Act, 1965.

Please refer to the note of Section 2.3 of the Circulars to shareholders dated 7 June 2012 and 13 May 2013 respectively on the directorships and shareholdings of the interested directors and interested major shareholders in the transacting parties. 197 ad a Berh AirAsi 198 t epor 2012al R Annu

reports and financial statements Directors’ Report

The Directors hereby submit their annual report to the members together with the audited financial statements of the Group and Company for the financial year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are described in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS

Group Company RM’000 RM’000

Net profit for the financial year 1,831,338 662,858

DIVIDENDS

The dividend on ordinary shares paid by the Company since the end of the previous financial year was as follows:

RM’000

In respect of the financial year ended 31 December 2011, first and final dividend of 5 sen per ordinary share of RM0.10 each, on 2,779,141,580 ordinary shares of RM0.10 each, paid on 20 July 2012 138,957

In respect of the financial year ended 31 December 2012, a single-tier interim ‘special’ dividend of 18 sen per ordinary share of RM0.10 each on 2,779,906,580 ordinary shares of RM0.10 each, paid on 12 April 2013 500,383

639,340

The Directors now recommend a final single-tier dividend in respect of the financial year ended 31 December 2012 of 6 sen per share on 2,780,510,580 ordinary shares of RM0.10 each amounting to RM166,830,635, which is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

ISSUANCE OF SHARES

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM277,808,558 to RM277,990,658 by way of issuance of 1,821,000 ordinary shares of RM0.10 each pursuant to the exercise of the Company’s Employee Share Option Scheme (“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM1,784,580, has been credited to the Share Premium account.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company. There were no other changes in the issued and paid-up share capital of the Company during the financial year. EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

The Company implemented an ESOS on 1 September 2004. The ESOS is governed by the by-laws which were approved by the shareholders on 7 June 2004 and was effective for a period of 5 years from the date of approval. On 28 May 2009, the Company extended the duration of its ESOS which expired on 6 June 2009 by another 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws. The ESOS extension was not subject to any regulatory or shareholders’ approval.

Details of the ESOS are set out in Note 30 to the financial statements.

The Company has been granted an exemption by the Companies Commission of Malaysia, the information of which has been separately filed, from having to disclose the list of option holders and their holdings, except for eligible employees (inclusive of Executive Directors) with share options allocation of 320,000 and above. The employees who have been granted options of more than 320,000 shares are Tan Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun, details of which are disclosed in the section on Directors’ Interests in Shares below.

DIRECTORS

The Directors who have held office during the period since the date of the last report are as follows:

Dato’ Abdel Aziz @ Abdul Aziz Bin Abu Bakar Tan Sri Dr. Anthony Francis Fernandes Dato’ Kamarudin Bin Meranun Conor Mc Carthy Dato’ Leong Sonny @ Leong Khee Seong Dato’ Fam Lee Ee Dato’ Mohamed Khadar Bin Merican Datuk Mohd Omar Bin Mustapha Aireen Omar (Appointed on 1 July 2012) Tan Sri Mohamed Azman Bin Yahya (Resigned on 30 April 2012)

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the Company’s ESOS (see Note 5 to the financial statements).

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’ remuneration as disclosed in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 36 to the financial statements.

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reports and financial statements Directors’ Report

DIRECTORS’ INTERESTS IN SHARES

According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financial year in shares and options over shares in the Company are as follows:

Number of ordinary shares of RM0.10 each

At At 1.1.2012 Acquired Disposed 31.12.2012

Direct interests in the Company Dato’ Abdel Aziz @ Abdul Aziz Bin Abu Bakar - 300,000 (100,000) 200,000** Tan Sri Dr. Anthony Francis Fernandes 3,227,010 - - 3,227,010 Dato’ Kamarudin Bin Meranun 1,692,900 600,000 - 2,292,900 Conor Mc Carthy 9,665,000 500,000 (1,065,000) 9,100,000*** Dato’ Leong Sonny @ Leong Khee Seong 100,000 - - 100,000 Dato’ Fam Lee Ee 50,000 - - 50,000

Indirect interests Tan Sri Dr. Anthony Francis Fernandes * 362,957,782 277,650,600 - 640,608,382 Dato’ Kamarudin Bin Meranun * 362,957,782 277,650,600 - 640,608,382

* By virtue of their interests in shares in the substantial shareholder of the Company, Tune Air Sdn. Bhd. (“TASB”), Tan Sri Dr. Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun are deemed to have interests in the Company to the extent of TASB’s interests therein, in accordance with Section 6A of the Companies Act, 1965.

** Shares held under Cimsec Nominees (Tempatan) Sdn Bhd

*** 100,000 shares held in personal name and 9,000,000 shares held under HSBC Nominees (Asing) Sdn Bhd.

Number of options over ordinary shares of RM0.10 each

At At 1.1.2012 Granted Exercised 31.12.2012

The Company Dato’ Kamarudin Bin Meranun 600,000 - (600,000) -

Other than as disclosed above, according to the register of Directors’ shareholdings, none of the other Directors in office at the end of the financial year held any interest in shares, options over shares, or debentures of the Company and its related corporations during the financial year. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet their obligations as and when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group and Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group and Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group’s and Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and Company for the financial year in which this report is made.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

In accordance with a resolution of the Board of Directors dated 29 April 2013.

TAN SRI DR. ANTHONY FRANCIS FERNANDES AIREEN OMAR DIRECTOR DIRECTOR 201 ad a Berh AirAsi 202 t epor 2012al R Annu

reports and financial statements Income Statements For the Financial Year Ended 31 December 2012

Group Company

Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Revenue 4 4,946,091 4,495,141 4,946,091 4,449,933 Operating expenses - Staff costs 5 (580,294) (484,177) (580,207) (482,526) - Depreciation of property, plant and equipment 12 (567,176) (570,909) (567,176) (570,755) - Aircraft fuel expenses (1,947,947) (1,759,868) (1,947,947) (1,759,868) - Maintenance and overhaul (112,398) (86,698) (112,398) (86,698) - User charges and other related expenses (415,898) (386,868) (415,894) (385,565) - Aircraft operating lease expenses (159,512) (80,655) (159,512) (80,655) - Travel and tour operating expenses - (36,555) - - - Other operating expenses 6 (269,225) (163,747) (268,401) (153,688) Other gains/(losses) – net 7 11,035 (55,501) 11,035 (55,501) Other income 8 123,942 292,357 113,510 292,156

Operating profit 1,028,618 1,162,520 1,019,101 1,166,833

Finance income 9 79,391 66,078 79,237 66,056 Finance costs 9 (378,808) (377,894) (378,785) (377,865)

Net operating profit 729,201 850,704 719,553 855,024

Foreign exchange gains/(losses) on borrowings 9 145,425 (93,472) 145,393 (93,472) Foreign exchange (losses)/gains on amounts due from associates and jointly-controlled entities (29,139) 13,457 (29,139) 13,457 Fair value and gain on disposal of interest in Thai AirAsia Co Ltd 14 1,160,370 - - - Share of results of jointly controlled entities 14 (2,899) 11,980 - - Share of results of associates 15 1,329 (5,652) - -

Profit before taxation 2,004,287 777,017 835,807 775,009

Taxation

- Current taxation 10 (18,245) (18,533) (18,194) (18,533) - Deferred taxation 10 (154,704) (203,160) (154,755) (203,109)

(172,949) (221,693) (172,949) (221,642)

Net profit for the financial year 1,831,338 555,324 662,858 553,367

Earnings per share (sen) - Basic 11 65.9 20.0 - Diluted 11 65.8 20.0

reports and financial statements Statements of Comprehensive Income For the Financial Year Ended 31 December 2012 Group Company

Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Profit for the financial year 1,831,338 555,324 662,858 553,367

Other comprehensive income/(loss) - Available-for-sale financial assets 16 110,284 - 110,284 - - Cash flow hedges 61,215 (88,054) 61,215 (88,054) - Foreign currency translation differences (145) 111 - -

Other comprehensive income/(loss) for the financial year, net of tax 171,354 (87,943) 171,499 (88,054)

Total comprehensive income for the financial year 2,002,692 467,381 834,357 465,313

Total comprehensive income attributable to: - Equity holders of the Company 2,002,692 467,381 - Non-controlling interests - -

2,002,692 467,381

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reports and financial statements Balance Sheets As at 31 December 2012

Group Company

Note 31.12.2012 31.12.2011 1.1.2011* 31.12.2012 31.12.2011 1.1.2011* RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

NON-CURRENT ASSETS

Property, plant and equipment 12 9,786,030 8,586,451 9,318,041 9,786,030 8,586,146 9,316,592 Investments in subsidiaries 13 - - - 23,480 23,480 25,384 Investments in jointly controlled entities 14 120,755 123,654 - 81,559 81,559 - Investments in associates 15 1,204,575 39,079 29 29 29 29 Available-for-sale financial assets 16 308,792 152,942 152,942 295,982 152,942 152,942 Other investments - - 25 - - 25 Goodwill 17 7,334 7,334 8,738 - - - Deferred tax assets 18 361,396 516,100 719,260 361,396 516,151 719,260 Receivables and prepayments 19 28,141 15,548 23,593 28,141 15,548 23,593 Deposits on aircraft purchase 20 483,795 367,768 248,684 483,795 367,768 248,684 Amount due from an associate 21 449,578 513,614 117,964 449,578 513,614 117,964 Derivative financial instruments 22 37,673 44,811 25,544 37,673 44,811 25,544

12,788,069 10,367,301 10,614,820 11,547,663 10,302,048 10,630,017

CURRENT ASSETS

Inventories 23 23,725 19,730 17,553 23,725 19,730 17,005 Receivables and prepayments 19 1,357,094 1,109,775 841,122 1,323,614 1,081,125 815,921 Derivative financialinstruments 22 - 7,659 - - 7,659 - Amounts due from subsidiaries 24 - - - 174,730 105,409 432,382 Amounts due from jointly-controlled entities 25 10,765 4,526 99,802 3,066 4,526 - Amounts due from associates 21 331,407 289,492 162,386 331,407 289,492 162,386 Amount due from a related party 24 1,282 - - 1,282 - - Deposits, cash and bank balances 26 2,232,731 2,105,010 1,504,617 2,166,999 2,079,712 1,499,061 Current tax recoverable - 2,216 - - 1,942 -

3,957,004 3,538,408 2,625,480 4,024,823 3,589,595 2,926,755 Group Company

Note 31.12.2012 31.12.2011 1.1.2011* 31.12.2012 31.12.2011 1.1.2011* RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LESS: CURRENT LIABILITIES

Trade and other payables 27 1,295,065 1,137,232 912,943 1,266,924 1,103,063 884,344 Sales in advance 546,150 389,833 328,549 533,201 376,628 307,987 Amounts due to subsidiaries 28 - - - - 5,605 44,251 Amounts due to jointly controlled entities 25 - 19,761 - - 50,087 322,614 Amount due to an associate 21 29,032 4,444 5,223 68,052 4,444 5,223 Amount due to a related party 28 12,639 10,560 41,262 12,639 10,560 41,262 Hire-purchase payables - - 15 - - 15 Borrowings 29 1,126,154 594,231 553,967 1,126,154 594,231 553,967 Derivative financial instruments 22 35,419 38,011 - 35,419 38,011 - Current tax liabilities 5,122 - 1,632 5,563 - 955

3,049,581 2,194,072 1,843,591 3,047,952 2,182,629 2,160,618

NET CURRENT ASSETS 907,423 1,344,336 781,889 976,871 1,406,966 766,137

NON-CURRENT LIABILITIES

Borrowings 29 7,283,185 7,186,919 7,302,884 7,283,185 7,186,919 7,302,884 Derivative financial instruments 22 510,208 488,321 452,865 510,208 488,321 452,865

7,793,393 7,675,240 7,755,749 7,793,393 7,675,240 7,755,749

5,902,099 4,036,397 3,640,960 4,731,141 4,033,774 3,640,405

CAPITAL AND RESERVES

Share capital 30 277,991 277,809 277,344 277,991 277,809 277,344 Share premium 1,227,935 1,226,150 1,221,594 1,227,935 1,226,150 1,221,594 Foreign exchange reserve 451 596 485 - - - Retained earnings 31 4,273,311 2,580,930 2,102,571 3,102,804 2,578,903 2,102,501 Other reserves 122,411 (49,088) 38,966 122,411 (49,088) 38,966

Shareholders’ equity 5,902,099 4,036,397 3,640,960 4,731,141 4,033,774 3,640,405

* Also represents the balance sheets of the Group and Company as at 31 December 2010.

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reports and financial statements Consolidated Statement of Changes In Equity For the Financial Year Ended 31 December 2012 Attributable to equity holders of the Company

Issued and fully paid ordinary shares of RM0.10 each

Foreign Cash flow Non- Number Nominal Share exchange hedge AFS Retained controlling Total Note of shares value premium reserve reserve reserve earnings Total interests equity ‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2012 2,778,087 277,809 1,226,150 596 (159,363) 110,275 2,580,930 4,036,397 - 4,036,397

Net profit for the financial year ------1,831,338 1,831,338 - 1,831,338

Fair value losses during the financialyear - - - - (45,128) - - (45,128) - (45,128) Amounts transferred to income statement - - - - 106,343 - - 106,343 - 106,343

Other comprehensive (loss)/income - - - (145) - 110,284 - 110,139 - 110,139

Total comprehensive (loss)/income - - - (145) 61,215 110,284 1,831,338 2,002,692 - 2,002,692

Dividend 32 ------(138,957) (138,957) - (138,957)

Issuance of ordinary shares - pursuant to the Employee Share Option Scheme (‘ESOS’) 30 1,821 182 1,785 - - - - 1,967 - 1,967

At 31 December 2012 2,779,908 277,991 1,227,935 451 (98,148) 220,559 4,273,311 5,902,099 - 5,902,099 Attributable to equity holders of the Company

Issued and fully paid ordinary shares of RM0.10 each

Foreign Cash flow Non- Number Nominal Share exchange hedge AFS Retained controlling Total Note of shares value premium reserve reserve reserve earnings Total interests equity ‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 2,773,437 277,344 1,221,594 485 (71,309) 110,275 2,102,571 3,640,960 - 3,640,960

Net profit for the financial year ------555,324 555,324 - 555,324

Fair value gains during the financialyear - - - - 8,962 - - 8,962 - 8,962 Amounts transferred to income statement - - - - (97,016) - - (97,016) - (97,016)

Other comprehensive income - - - 111 - - - 111 - 111

Total comprehensive income/ (loss) - - - 111 (88,054) - 555,324 467,381 - 467,381

Dividend 32 ------(76,965) (76,965) - (76,965)

Issuance of ordinary shares - pursuant to the Employee Share Option Scheme (‘ESOS’) 30 4,650 465 4,556 - - - - 5,021 - 5,021

At 31 December 2011 2,778,087 277,809 1,226,150 596 (159,363) 110,275 2,580,930 4,036,397 - 4,036,397

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reports and financial statements Company Statement of Changes In Equity For the Financial Year Ended 31 December 2012 Issued and fully paid ordinary shares of RM0.10 each Non-distributable Distributable

Cash flow Number Nominal hedge AFS Share Retained Note of shares value reserve reserve premium earnings Total ‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2012 2,778,087 277,809 (159,363) 110,275 1,226,150 2,578,903 4,033,774

Net profit for the financial year - - - - - 662,858 662,858

Fair value losses during the financial year - - (45,128) - - - (45,128) Amounts transferred to income statement - - 106,343 - - - 106,343

Other comprehensive income - - - 110,284 - - 110,284

Total comprehensive income - - 61,215 110,284 - 662,858 834,357

Dividend 32 - - - - - (138,957) (138,957)

Issuance of shares - pursuant to the Employee Share Option Scheme (‘ESOS’) 30 1,821 182 - - 1,785 - 1,967

At 31 December 2012 2,779,908 277,991 (98,148) 220,559 1,227,935 3,102,804 4,731,141 Issued and fully paid ordinary shares of RM0.10 each Non-distributable Distributable

Cash flow Number Nominal hedge AFS Share Retained Note of shares value reserve reserve premium earnings Total ‘000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 2,773,437 277,344 (71,309) 110,275 1,221,594 2,102,501 3,640,405

Net profit for the financial year - - - - - 553,367 553,367

Fair value gains during the financial year - - 8,962 - - - 8,962 Amounts transferred to income statement - - (97,016) - - - (97,016)

Total comprehensive (loss)/income - - (88,054) - - 553,367 465,313

Dividends 32 - - - - - (76,965) (76,965)

Issuance of shares - pursuant to the Employee Share Option Scheme (‘ESOS’) 30 4,650 465 - - 4,556 - 5,021

At 31 December 2011 2,778,087 277,809 (159,363) 110,275 1,226,150 2,578,903 4,033,774

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reports and financial statements Cash Flow Statements For the Financial Year Ended 31 December 2012

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 2,004,287 777,017 835,807 775,009

Adjustments:

Property, plant and equipment - Depreciation 567,176 570,909 567,176 570,755 - Write off - 1,089 - - - Impairment - 16,983 - 16,983 - Gain on disposals (9,328) (198,923) (9,328) (198,923) Impairment loss on goodwill - 1,404 - - Fair value and gain on disposal of interest in Thai AirAsia Co Ltd (1,160,370) - - - Impairment of investment in subsidiary - - - 1,904 Amortisation of other investments - 25 - 25 Unwinding of discount on related party receivables - (22,656) - (22,656) Fair value loss/(gain) on derivative financial instruments 95,308 (41,515) 95,308 (41,515) Share of results of jointly controlled entities 2,899 (11,980) - - Share of results of associates (1,329) 5,652 - - Net unrealised foreign exchange (gain)/loss (205,524) 150,234 (205,492) 150,234 Interest expense 378,808 368,007 378,785 368,007 Interest income (79,391) (43,422) (79,237) (43,422)

1,592,536 1,572,824 1,583,019 1,576,401

Changes in working capital:

Inventories (3,995) (2,177) (3,995) (2,725) Receivables and prepayments (268,116) (261,860) (263,141) (252,196) Trade and other payables 315,856 272,573 316,254 235,716 Related party balances 28,948 169,205 (23,981) 97,760

Cash generated from operations 1,665,229 1,750,565 1,608,156 1,654,956

Interest paid (378,808) (367,707) (378,485) (367,707) Interest received 79,391 43,422 79,237 43,422 Tax paid (10,856) (22,381) (10,689) (21,430)

Net cash from operating activities 1,354,956 1,403,899 1,298,219 1,309,241

Group Company

Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM INVESTING ACTIVITIES

Property, plant and equipment - Additions (1,772,597) (612,393) (1,772,597) (612,294) - Proceeds from disposals 15,170 387,960 14,865 387,960 Investment in a jointly-controlled entity - (111,674) - (81,559) Investment in an associate (16,608) (44,702) - - Deposits on aircraft purchase (128,740) (106,662) (128,740) (106,662) Purchases of available-for-sale financial assets (32,756) - (32,756) -

Net cash used in investing activities (1,935,531) (487,471) (1,919,228) (412,555)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from allotment of shares 1,967 5,021 1,967 5,021 Hire-purchase instalments paid - (15) - (15) Proceeds from borrowings 1,533,298 508,148 1,533,298 508,148 Repayment of borrowings (662,376) (752,224) (662,376) (752,224) Dividends paid (138,957) (76,965) (138,957) (76,965) Deposits released/(pledged) as securities (1,094) 16,395 (1,094) 16,395

Net cash from/(used in) financing activities 732,838 (299,640) 732,838 (299,640)

NET INCREASE FOR THE FINANCIAL YEAR 152,263 616,788 111,829 597,046

CURRENCY TRANSLATION DIFFERENCES (25,636) - (25,636) -

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 2,092,616 1,475,828 2,067,318 1,470,272

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 26 2,219,243 2,092,616 2,153,511 2,067,318

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reports and financial statements Cash Flow Statements For the Financial Year Ended 31 December 2012

SIGNIFICANT NON-CASH TRANSACTIONS

Group Company

Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Total purchase of property, plant and equipment during the financial year 12 (1,896,197) (1,281,964) (1,896,197) (1,281,865) Settlement by lessors on behalf of the Company for purchase of aircraft 123,600 669,571 123,600 669,571

Net cash used in purchase of property, plant and equipment (1,772,597) (612,393) (1,772,597) (612,294)

Net book value of property, plant and equipment disposed during the financial year 12 129,442 1,424,573 129,137 1,424,573 Gain on disposal of property, plant and equipment 9,328 198,923 9,328 198,923

Total proceeds from disposal of property, plant and equipment 138,770 1,623,496 138,465 1,623,496

Settlement by lessors on behalf of the Company for purchase of aircraft (123,600) (669,571) (123,600) (669,571)

Advances to an associate for purchase of property, plant and equipment - (565,965) - (565,965)

Net cash proceeds received from disposal of property, plant and equipment 15,170 387,960 14,865 387,960 reports and financial statements Notes to the Financial Statements 31 December 2012

1 GENERAL INFORMATION

The principal activity of the Company is that of providing air transportation services. The principal activities of the subsidiaries are described in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the financial year.

The address of the registered office of the Company is as follows:

B-13-15, Level 13, Menara Prima Tower B, Jalan PJU1/39, Dataran Prima 47301 Petaling Jaya Selangor Darul Ehsan

The address of the principal place of business of the Company is as follows:

LCC Terminal Jalan KLIA S3 Southern Support Zone KL International Airport 64000 Sepang Selangor Darul Ehsan

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 29 April 2013.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial statements:

(a) Basis of preparation

The financial statements of the Group and Company have been prepared in accordance with the provisions of the Malaysian Financial Reporting Standards (‘MFRS’), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The financial statementsof the Group and the Company for the financial year ended 31 December 2012 are the first set of financial statements prepared in accordance with the MFRS, including MFRS 1, ‘First-time Adoption of Malaysian Financial Reporting Standards’. The Group and Company have consistently applied the same accounting policies in their opening MFRS balance sheets as at 1 January 2011 (transition date) and throughout all years presented, as if these policies had always been in effect. The comparative balance sheets have been restated to give effect to these changes as disclosed in Note 39 to the financial statements. Save for the required presentation of a balance sheet and related notes as of the date of the transition on 1 January 2011, there is no other significant impact on the Group and Company’s financial results and position, or changes to the accounting policies of the Group, arising from the adoption of this MFRS framework.

The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

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reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Basis of preparation (continued)

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported financial year. It also requires Directors to exercise their judgment in the process of applying the Group’s and Company’s accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3 to the financial statements.

(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective

The Group will apply the new standards, amendments to standards and interpretations in the following period:

(i) Financial years beginning on or after 1 January 2013

• MFRS 10, ‘Consolidated Financial Statements’ (effective from 1 January 2013) changes the definition of control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. It replaces all the guidance on control and consolidation in MFRS 127, ‘Consolidated and Separate Financial Statements’ and IC Interpretation 112, ‘Consolidation - Special Purpose Entities’.

• MFRS 12, ‘Disclosures of Interests in Other Entities’ (effective from 1 January 2013) sets out the required disclosures for entities reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS 128, ‘Investments in Associates’. It requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities.

• MFRS 13, ‘Fair Value Measurement’ (effective from 1 January 2013) aims to improve consistency and reduces complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7, ‘Financial Instruments: Disclosures’, but apply to all assets and liabilities measured at fair value, not just financial ones.

• The revised MFRS 127, ‘Separate Financial Statements’ (effective from 1 January 2013) includes the provisions on separate financial statements that are left after the control provisions of MFRS 127 have been included in the new MFRS 10.

• The revised MFRS 128, ‘Investments in Associates and Joint Ventures’ (effective from 1 January 2013) includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11.

• Amendment to MFRS 101, ‘Presentation of Items of Other Comprehensive Income’ (effective from 1 July 2012) requires entities to separate items presented in ‘other comprehensive income’ (‘OCI’) in the statement of comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments do not address which items are presented in OCI.

• Amendment to MFRS 119, ‘Employee benefits’ (effective from 1 January 2013) makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall be withdrawn on application of this amendment.

• Amendment to MFRS 7, ‘Financial Instruments: Disclosures’ (effective from 1 January 2013) requires more extensive disclosures focusing on quantitative information about recognised financial instruments that are offset in the statement of financial position and those that are subject to master netting or similar arrangements irrespective of whether they are offset.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective (continued)

(ii) Financial years beginning on or after 1 January 2014

• Amendment to MFRS 132, ‘Financial Instruments: Presentation’ (effective from 1 January 2014) does not change the current offsetting model in MFRS 132. It clarifies the meaning of ‘currently has a legally enforceable right of set-off’ that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.

(iii) Financial years beginning on or after 1 January 2015

• MFRS 9, ‘Financial Instruments − Classification and Measurement of Financial Assets and Financial Liabilities’ (effective from 1 January 2015) replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

The accounting and presentation for financial liabilities and for de-recognisingfinancial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (‘FVTPL’). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liability’s credit risk directly in OCI. There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may be transferred within equity.

The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.

MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9.

The Group is in the process of assessing the impact of the adoption of these standards, amendments to published standards and interpretations to existing standards.

(c) Basis of consolidation

(i) Subsidiaries

Subsidiaries are those corporations or other entities (including special purpose entities) in which the Group has power to govern the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effects of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases.

The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating polices by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group’s voting rights relative to the size and dispersion of holdings of other shareholders give the group the power to govern the financial and operating polices.

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reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Basis of consolidation (continued)

(i) Subsidiaries (continued)

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the successive acquisition dates at each stage, and the changes in fair value is taken through profit or loss.

Profit or loss and each component of other comprehensive income of the subsidiaries are attributed to the parent and the non-controlling interest, even if this results in the non-controlling interest having a deficit balance.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

When the Group ceases to have control over a subsidiary, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(ii) Jointly controlled entities

Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing of control by the Group with one or more parties where the strategic financial and operation decisions relating to the entities require unanimousconsent of the parties sharing control.

The Group’s interest in jointly controlled entities is accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recognising the Group’s share of the post-acquisition results of jointly controlled entities in profit or loss and its share of post-acquisition changes of the investee’s reserves in other comprehensive income. The cumulative post-acquisition changes are adjusted against the cost of the investment and include goodwill on acquisition (net of accumulated impairment loss). 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Basis of consolidation (continued)

(ii) Jointly controlled entities (continued)

The Group’s share of its jointly controlled entities’ post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investments. When the Group’s share of losses in jointly controlled entities equals or exceeds its interest in the jointly controlled entities, including any other long-term interests that, in substance, form part of the Group’s net investment in those entities, the Group discontinues recognising its share of further losses.

After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entities. If the jointly controlled entities subsequently report profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, in applying the equity method, appropriate adjustments are made to the financial statements of the jointly controlled entities to ensure consistency of accounting policies with those of the Group.

(iii) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

Dilution gains and losses arising in investments in associates are recognised in the income statement.

The Group’s share of post-acquisition profit or loss is recognised in the income statements, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ in the income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminatedunless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

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reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (‘CGUs’), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(e) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation is calculated using the straight-line method to write-off the cost of the assets to their residual values over their estimated useful lives. The useful lives for this purpose are as follows:

Aircraft - engines and airframe excluding service potential 25 years - service potential of engines and airframe 7 or 13 years Aircraft spares 10 years Aircraft fixtures and fittings Useful life of aircraft or remaining lease term of aircraft, whichever is shorter Buildings - simulator 28.75 years - hangar 50 years Motor vehicles 5 years Office equipment, furniture and fittings 5 years Office renovation 5 years Simulator equipment 25 years Operating plant and ground equipment 5 years Kitchen equipment 5 years In flight equipment 5 years Training equipment 5 years

Service potential of 7 years represents the period over which the expected cost of the first major aircraft engine overhaul is depreciated. Subsequent to the engine overhaul, the actual cost incurred is capitalised and depreciated over the subsequent 7 years.

Service potential of 13 years represents the period over which the expected cost of the first major airframe check is depreciated. Subsequent to the airframe check, the actual cost incurred is capitalised and depreciated over the subsequent 13 years.

Assets not yet in operation are stated at cost and are not depreciated until the assets are ready for their intended use. Useful lives of assets are reviewed and adjusted if appropriate, at the balance sheet date. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Property, plant and equipment (continued)

Residual values, where applicable, are reviewed annually against prevailing market rates at the balance sheet date for equivalent aged assets and depreciation rates are adjusted accordingly on a prospective basis. For the current financial year ended 31 December 2012, the estimated residual value for aircraft airframes and engines is 10% of their cost (31.12.2011: 10% of their cost; 1.1.2011: 10% of their cost).

An element of the cost of an acquired aircraft is attributed on acquisition to its service potential, reflecting the maintenance condition of its engines and airframe. This cost, which can equate to a substantial element of the total aircraft cost, is amortised over the shorter of the period to the next checks or the remaining life of the aircraft.

The cost of subsequent major airframe and engine maintenance checks as well as upgrades to leased assets are capitalised and amortised over the shorter of the period to the next check or the remaining life of the aircraft.

At each balance sheet date, the Group assesses whether there is any indication of impairment. If such an indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note 2(g) on impairment of assets.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income statement.

Deposits on aircraft purchase are included as part of the cost of the aircraft and are depreciated from the date that aircraft is ready for its intended use.

(f) Investments

In the Company’s separate financial statements, investments in subsidiaries, jointly controlled entities and associates are stated at cost less accumulated impairment losses. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount (see Note 2(g)).

(g) Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually, or as and when events or circumstances occur indicating that an impairment may exist. Property, plant and equipment and other non-current assets, including intangible assets with definite useful lives, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed for possible reversal at each reporting date.

Any impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.

(h) Maintenance and overhaul

Owned aircraft

The accounting for the cost of providing major airframe and certain engine maintenance checks for owned aircraft is described in the accounting policy for property, plant and equipment. 219 ad a Berh AirAsi 220 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(h) Maintenance and overhaul (continued)

Leased aircraft

Where the Group has a commitment to maintain aircraft held under operating leases, provision is made during the lease term for the rectification obligations contained within the lease agreements. The provisions are based on estimated future costs of major airframe, certain engine maintenance checks and one-off costs incurred at the end of the lease by making appropriate charges to the income statement calculated by reference to the number of hours or cycles operated during the financial year.

(i) Leases

Finance leases

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payment. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the remaining balance of the liability. The corresponding rental obligations, net of finance charges, are included in payables. The interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Property, plant and equipment acquired under finance lease contracts are depreciated over the estimated useful life of the asset, in accordance with the annual rates stated in Note 2(e) above. Where there is no reasonable certainty that the ownership will be transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life.

Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of incentives received from the lessor) are charged to the income statement on a straight-line basis over the lease period.

Assets leased out by the Group under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.

(j) Inventories

Inventories comprising spares and consumables used internally for repairs and maintenance are stated at the lower of cost and net realisable value.

Cost is determined on the weighted average basis, and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs to completion and applicable variable selling expenses. In arriving at net realisable value, due allowance is made for all damaged, obsolete and slow-moving items. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Financial assets

(i) Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available-for- sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified inthis category if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term. Derivatives are also categorised as held for trading unless they are designated as hedges.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’, ‘amounts due from associates and other related companies balances’ and ‘deposits, cash and bank balances’ in the balance sheets.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

(ii) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss.

(iii) Subsequent measurement – gains and losses

Available-for-sale financial assets and financial assets through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except for impairment losses (see accounting policy Note 2(k)(iv)) and foreign exchange gains and losses on monetary assets. The exchange differences on monetaryassets are recognised in the income statement, whereas exchange differences on non-monetary assets are recognised in other comprehensive income as part of fair value change.

Interest and dividend income on available-for-sale financial assets are recognised separately in the income statement. Interest on available-for- sale debt securities calculated using the effective interest method is recognised in the income statement. Dividend income on available-for-sale equity instruments are recognised in the income statement when the Group’s right to receive payments is established. 221 ad a Berh AirAsi 222 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Financial assets (continued)

(iv) Subsequent measurement – Impairment of financial assets

Assets carried at amortised cost

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

• Significant financial difficulty of the issuer or obligor; • A breach of contract, such as a default or delinquency in interest or principal payments; • The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; • It becomes probable that the borrower will enter bankruptcy or other financial reorganisation; • Disappearance of an active market for that financial asset because of financial difficulties; or • Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: (i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. If ‘loans and receivables’ have a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

Assets classified as available-for-sale

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised cost’ above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an indicator that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in the income statement. The amount of cumulative loss that is reclassified to the income statement is the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Financial assets (continued)

(iv) Subsequent measurement – Impairment of financial assets (continued)

Assets classified as available-for-sale (continued)

Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

Impairment testing on trade receivables is described in accounting policy Note 2(n).

(v) De-recognition

Financial assets are de-recognised when the rights to receive cash flowsfrom the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to the income statements.

(l) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the balance sheets when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

(m) Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.

The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in Note 22 to the financial statements. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

Cash flow hedge

The effectiveportion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within ‘other gains/(losses) – net’.

Amounts accumulated in equity are reclassified to the income statements in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement and presented separately after net operating profit. 223 ad a Berh AirAsi 224 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(m) Derivative financial instruments and hedging activities (continued)

Cash flow hedge (continued)

However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in the case of inventory, or in depreciation in the case of property, plant and equipment.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within ‘other gains/(losses) – net’.

(n) Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. Otherwise, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

(o) Cash and cash equivalents

For the purpose of the cash flow statements, cash and cash equivalents comprise cash on hand, bank balances, demand deposits and other short term, highly liquid investments with original maturities of three months or less, less bank overdrafts. Deposits held as pledged securities for term loans granted are not included as cash and cash equivalents.

(p) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are not recognised for future operating losses.

(q) Share capital

(i) Classification

Ordinary shares with discretionary dividends are classified as equity.

(ii) Share issue costs

Incremental external costs directly attributable to the issuance of new shares or options are deducted against share premium account.

(iii) Dividends to shareholders of the Company

Dividends on ordinary shares are recognised as a liability in the period in which they are declared. A dividend declared after the end of the reporting period, but before the financial statements are authorised for issue, is not recognised as a liability at the end of the reporting period. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(r) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. The finance costs, which represent the difference between the initial recognised amount and the redemption value is recognised in the financial statements over the period of the borrowings using the effective interest method.

Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported within finance cost in the income statements.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

(s) Income taxes

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits, including withholding taxes payable by foreign subsidiaries, jointly controlled entities or associates.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

Deferred tax assets are recognised for the carry forward of unused tax losses and tax credits (including investment tax allowances) to the extent that it is probable that taxable profits will be available against which the unutilised tax losses and unused tax credits can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, jointly controlled entities and associates except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group’s share of income taxes of jointly controlled entities and associates are included in the Group’s share of results of jointly controlled entities and associates.

Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

(t) Employee benefits

(i) Short term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the financial year in which the associated services are rendered by the employees of the Group.

(ii) Defined contribution plan

The Group’s contributions to the Employees’ Provident Fund are charged to the income statement in the financial year to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iii) Share based payments

MFRS 2 – Share-based Payment requires recognition of share-based payment transactions including the value of share options in the financial statements. There is no impact on the financial statements of the Group following the prospective application of FRS 2 in 2006as all the share options of the Company were fully vested prior to the effective date of the standard.

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reports and financial statements Notes to the Financial Statements 31 December 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) Revenue recognition

Scheduled passenger flight and chartered flight income are recognised upon the rendering of transportation services and where applicable, are stated net of discounts. The value of seats sold for which services have not been rendered is included in current liabilities as sales in advance. Revenue from aircraft rentals is recorded on a straight-line basis over the term of the lease.

Other revenue which includes fuel surcharge, insurance surcharge, administrative fees, excess baggage and baggage handling fees, are recognised upon the completion of services rendered and where applicable, are stated net of discounts. Freight and other related revenue are recognised upon the completion of services rendered and where applicable, are stated net of discounts. Income from the provision of tour operations (both inbound and outbound) and travel agency services is recognised upon services being rendered and where applicable, are stated net of discounts.

Rental income is recognised on an accrual basis.

Brand license fee is recognised on an accrual basis in accordance with the substance of the agreement.

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables are recognised using the original effective interest rate.

The Group participates in a loyalty programme where customers accumulate points for purchases made which entitle them to discounts on future purchases. Award points are recognised as a cost of sale at the time of issue while revenue from the award points is recognised when the points are redeemed. The amount of revenue is based on the number of points redeemed and the redemption value of each point. Award points expire 36 months after the initial sale.

(v) Foreign currencies

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses arising from operations are included in arriving at the operating profit. Foreign exchange gains and losses arising from borrowings (after effects of effective hedges) and amounts due from associates and jointly controlled entities are separately disclosed after net operating profit.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(v) Foreign currencies (continued)

(iii) Group companies (continued)

(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is disposed of or sold, such exchange differences that were recorded in equity are recognised in the income statements as part of the gain or loss on disposal.

(w) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer).

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(x) Contingent liabilities

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or apresent obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interests.

The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions.

Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with MFRS 118 ‘Revenue’.

(y) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-marker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer that makes strategic decisions.

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reports and financial statements Notes to the Financial Statements 31 December 2012

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have a material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are explained below.

(i) Estimated useful lives and residual values of aircraft frames and engines

The Group reviews annually the estimated useful lives and residual values of aircraft airframes and engines based on factors such as business plans and strategies, expected level of usage, future technological developments and market prices.

Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives and residual values of aircraft airframes and engines as disclosed in Note 2(e), would increase the recorded depreciation charge and decrease the carrying amount of property, plant and equipment.

(ii) Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Estimating the future taxable profits involves significant assumptions, especially in respect of fares, loadfactor, fuel price, maintenance costs and currency movements. These assumptions have been built based on past performance and adjusted for non-recurring circumstances and a reasonable growth rate. However, even where the actual taxable profits in the future are 5 percent lower than the anticipated taxable profits, the deferred tax assets can still be fully utilised.

4 REVENUE

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Passenger seat sales 3,255,612 3,056,082 3,255,612 3,056,082 Baggage fees 392,142 362,597 392,142 362,597 Aircraft operating lease income 534,873 495,416 534,873 495,416 Surcharges and fees 378,685 139,313 378,685 139,313 Travel and tour operations - 45,208 - - Other revenue 384,779 396,525 384,779 396,525

4,946,091 4,495,141 4,946,091 4,449,933

Other revenue includes assigned seat, freight, cancellation, documentation and other fees, and the on-board sale of meals and merchandise. 5 STAFF COSTS

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Wages, salaries, bonus and allowances 521,806 440,458 521,719 438,938 Defined contribution retirement plan 58,488 43,719 58,488 43,588

580,294 484,177 580,207 482,526

Included in staff costs is Executive Directors’ remuneration which is analysed as follows:

Group and Company

2012 2011 RM’000 RM’000 Executive Directors - basic salaries, bonus and allowances 13,104 13,050 - defined contribution plan 1,404 1,566

Non-Executive Directors - fees 1,706 1,706

16,214 16,322

The remuneration payable to the Directors of the Company is analysed as follows:

Executive Non-executive

2012 2011 2012 2011

Range of remuneration RM100,001 to RM150,000 - - - 2 RM150,001 to RM200,000 - - 1 1 RM200,001 to RM250,000 - - 1 1 RM250,001 to RM300,000 - - 3 3 RM300,001 to RM350,000 - - 1 1 RM1,000,001 to RM2,000,000 1 - - - RM2,000,001 to RM3,000,000 - - - - RM3,000,001 to RM4,000,000 - - - - RM4,000,001 to RM5,000,000 - - - - RM5,000,001 to RM6,000,000 1 - - - RM6,000,001 to RM7,000,000 1 1 - - RM7,000,001 to RM8,000,000 - - - - RM8,000,001 to RM9,000,000 - 1 - - 229 ad a Berh AirAsi 230 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

5 STAFF COSTS (continued)

Set out below are details of outstanding options over the ordinary shares of the Company granted under the ESOS to the Directors:

Expiry Exercise At At Grant date date price 1.1.2012 Exercised Lapsed 31.12.2012 RM/share ’000 ’000 ’000 ’000

1 September 2004 6 June 2014 1.08 600 (600) - -

Expiry Exercise At At Grant date date price 1.1.2011 Exercised Lapsed 31.12.2011 RM/share ’000 ’000 ’000 ’000

1 September 2004 6 June 2014 1.08 1,200 (600) - 600

2012 2011 ’000 ’000

Number of share options vested at balance sheet date - 600

6 OTHER OPERATING EXPENSES

The following items have been charged/(credited) in arriving at other operating expenses:

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Impairment of investment in subsidiary - - - 1,904 Property, plant and equipment - Written off - 1,089 - - - Impairment loss - 16,983 - 16,983 Rental of land and building 6,140 2,810 6,140 2,810 Auditors’ remuneration - audit fees 700 595 675 566 - non-audit fees 169 245 169 245 Rental of equipment 2,929 3,095 2,929 3,095 Advertising costs 35,408 40,796 35,327 36,324 Amortisation of other investments - 25 - 25 Impairment loss on goodwill - 1,404 - - Net foreign exchange (gains)/losses from operations - Realised 29,440 37,112 29,440 36,895 - Unrealised 49,834 (24,277) 49,834 (24,277) 7 OTHER GAINS/(LOSSES) – NET

Group and Company

2012 2011 RM’000 RM’000

Interest rate contracts – Held for trading 20,613 (61,422) Forward foreign exchange contracts – Held for trading (5,262) - Fuel contracts – Held for trading (4,231) 4,231 Ineffectiveness on cash flow hedges (Note 22) (85) 1,690

Total 11,035 (55,501)

8 OTHER INCOME

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Gain on disposals of property, plant and equipment 9,328 198,923 9,328 198,923 Others 114,614 93,434 104,182 93,233

123,942 292,357 113,510 292,156

Other income (‘others’) includes brand licence fees, commission income and advertising income.

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9 FINANCE INCOME/(COSTS)

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Finance income:

- deposits with licensed banks 12,034 949 12,034 949 - short term deposits with fund management companies 3,017 2,927 3,017 2,927 - interest income on amounts due from associates and jointly-controlled entities 51,174 48,467 51,042 48,467 - other interest income 13,166 13,735 13,144 13,713

79,391 66,078 79,237 66,056

Finance costs:

Interest expense - bank borrowings (369,418) (342,268) (369,418) (342,268) - fair value movement recycled from cash flow hedge reserve - (25,739) - (25,739) - amortisation of premiums for interest rate caps (7,895) (8,247) (7,895) (8,247) - hire-purchase payables - (3) - (3) Bank facilities and other charges (1,495) (1,637) (1,472) (1,608)

(378,808) (377,894) (378,785) (377,865)

FOREIGN EXCHANGE GAINS/(LOSSES)

Borrowings: - realised (3,590) (2,520) (3,590) (2,520) - unrealised 255,358 (187,968) 255,326 (187,968) - fair value movement recycled from cash flow hedge reserve (106,343) 97,016 (106,343) 97,016

145,425 (93,472) 145,393 (93,472) 10 TAXATION

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Current taxation 18,587 18,578 18,536 18,578 Over accrual of income tax in prior years (342) (45) (342) (45)

18,245 18,533 18,194 18,533 Deferred taxation (Note 18) 154,704 203,160 154,755 203,109

172,949 221,693 172,949 221,642

Current taxation - Current financial year 18,587 18,578 18,536 18,578 - Over accrual of income tax in prior years (342) (45) (342) (45)

18,245 18,533 18,194 18,533 Deferred taxation - Origination and reversal of temporary differences 241,753 208,908 241,804 208,857 - Tax incentives (87,049) (5,748) (87,049) (5,748)

154,704 203,160 154,755 203,109

172,949 221,693 172,949 221,642

The current taxation charge is in respect of interest income which is assessed separately.

The explanation of the relationship between taxation and profit before taxation is as follows:

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Profit before taxation 2,004,287 777,017 835,807 775,009

Tax calculated at Malaysian tax rate of 25% (2011: 25%) 501,072 194,254 208,952 193,752

Tax effects of: - expenses not deductible for tax purposes 56,656 61,803 54,713 62,254 - income not subject to tax (297,388) (28,594) (3,325) (28,594) - temporary differences not recognised within the pioneer period - 23 - 23 - tax incentives (87,049) (5,748) (87,049) (5,748) - over accrual of income tax in prior years (342) (45) (342) (45)

Taxation 172,949 221,693 172,949 221,642

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reports and financial statements Notes to the Financial Statements 31 December 2012

11 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the net profit for the financial year by the weighted average number of ordinary shares in issue during the financial year.

Group

2012 2011

Net profit for the financial year (RM’000) 1,831,338 555,324 Weighted average number of ordinary shares in issue (‘000) 2,779,057 2,776,059 Earnings per share (sen) 65.9 20.0

(b) Diluted earnings per share

For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

The Group has dilutive potential ordinary shares arising from the Company’s share options granted to employees.

In assessing the dilution in earnings per share arising from the issue of share options, a computation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. This computation serves to determine the “bonus” element to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to net profit for the financial year in the calculation of the diluted earnings per share from the issue of the share options.

The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Group

2012 2011

Net profit for the financial year (RM’000) 1,831,338 555,324

Weighted average number of ordinary shares in issue (‘000) 2,779,057 2,776,059 Adjustment for ESOS (‘000) 3,124 5,095

Weighted average number of ordinary shares for diluted earnings per share 2,782,181 2,781,154

Diluted earnings per share (sen) 65.8 20.0 12 PROPERTY, PLANT AND EQUIPMENT

At Depreciation At 1 January 2012 Additions Disposals charge 31 December 2012 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Net book value

Aircraft engines, airframe and service potential 8,379,790 1,827,282 (124,154) (519,169) 9,563,749 Aircraft spares 109,404 40,624 (2,559) (22,262) 125,207 Aircraft fixtures and fittings 15,655 12,948 (1,283) (8,673) 18,647 Buildings 35,979 - - (1,398) 34,581 Motor vehicles 4,477 2,140 - (1,806) 4,811 Office equipment, furniture and fittings 19,498 7,293 (335) (6,751) 19,705 Office renovation 6,045 2,799 (790) (1,836) 6,218 Simulator equipment 1,152 24 - (38) 1,138 Operating plant and ground equipment 10,894 2,933 (2) (4,030) 9,795 In flight equipment 1,381 83 (319) (329) 816 Training equipment 2,176 71 - (884) 1,363

8,586,451 1,896,197 (129,442) (567,176) 9,786,030

Accumulated Accumulated impairment Net book Cost depreciation loss value RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2012

Aircraft engines, airframe and service potential 11,830,322 (2,266,573) - 9,563,749 Aircraft spares 253,714 (111,524) (16,983) 125,207 Aircraft fixtures and fittings 83,180 (64,533) - 18,647 Buildings 41,204 (6,623) - 34,581 Motor vehicles 20,746 (15,935) - 4,811 Office equipment, furniture and fittings 62,258 (42,553) - 19,705 Office renovation 17,348 (11,130) - 6,218 Simulator equipment 4,967 (3,829) - 1,138 Operating plant and ground equipment 35,989 (26,194) - 9,795 In flight equipment 1,732 (916) - 816 Training equipment 4,419 (3,056) - 1,363

12,355,879 (2,552,866) (16,983) 9,786,030

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

At Depreciation Impairment At 1 January 2011 Additions Disposals Write off charge loss 31 December 2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Net book value

Aircraft engines, airframe and service potential 9,045,624 1,210,565 (1,354,961) - (521,438) - 8,379,790 Aircraft spares 125,781 22,843 (1,198) - (21,039) (16,983) 109,404 Aircraft fixtures and fittings 22,763 6,031 (2,940) - (10,199) - 15,655 Buildings 37,387 - - - (1,408) - 35,979 Motor vehicles 6,782 585 - (605) (2,285) - 4,477 Office equipment, furniture and fittings 18,617 7,699 (404) (270) (6,144) - 19,498 Office renovation 2,818 4,705 - (20) (1,458) - 6,045 Simulator equipment 45,684 21,869 (65,038) - (1,363) - 1,152 Operating plant and ground equipment 9,408 5,753 (4) - (4,263) - 10,894 Kitchen equipment 194 - - (194) - - - In flight equipment 1,057 664 (28) - (312) - 1,381 Training equipment 1,926 1,250 - - (1,000) - 2,176

9,318,041 1,281,964 (1,424,573) (1,089) (570,909) (16,983) 8,586,451

Accumulated Accumulated impairment Net book Cost depreciation loss value RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2011

Aircraft engines, airframe and service potential 10,127,194 (1,747,404) - 8,379,790 Aircraft spares 216,049 (89,662) (16,983) 109,404 Aircraft fixtures and fittings 71,524 (55,869) - 15,655 Buildings 41,204 (5,225) - 35,979 Motor vehicles 18,599 (14,122) - 4,477 Office equipment, furniture and fittings 55,602 (36,104) - 19,498 Office renovation 15,339 (9,294) - 6,045 Simulator equipment 4,943 (3,791) - 1,152 Operating plant and ground equipment 33,529 (22,635) - 10,894 Kitchen equipment 8 (8) - - In flight equipment 1,968 (587) - 1,381 Training equipment 4,348 (2,172) - 2,176

10,590,307 (1,986,873) (16,983) 8,586,451 12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Accumulated Accumulated impairment Net book Cost depreciation loss value RM’000 RM’000 RM’000 RM’000

Group

At 1 January 2011

Aircraft engines, airframe and service potential 10,476,156 (1,423,536) (6,996) 9,045,624 Aircraft spares 195,155 (69,374) - 125,781 Aircraft fixtures and fittings 71,504 (48,741) - 22,763 Buildings 41,204 (3,817) - 37,387 Motor vehicles 18,619 (11,837) - 6,782 Office equipment, furniture and fittings 49,116 (30,499) - 18,617 Office renovation 10,655 (7,837) - 2,818 Simulator equipment 55,988 (10,304) - 45,684 Operating plant and ground equipment 28,121 (18,713) - 9,408 Kitchen equipment 202 (8) - 194 In flight equipment 1,385 (328) - 1,057 Training equipment 3,098 (1,172) - 1,926

10,951,203 (1,626,166) (6,996) 9,318,041

At Depreciation At 1 January 2012 Additions Disposals charge 31 December 2012 RM’000 RM’000 RM’000 RM’000 RM’000

Company

Net book value

Aircraft engines, airframe and service potential 8,379,790 1,827,282 (124,154) (519,169) 9,563,749 Aircraft spares 109,404 40,624 (2,559) (22,262) 125,207 Aircraft fixtures and fittings 15,655 12,948 (1,283) (8,673) 18,647 Buildings 35,979 - - (1,398) 34,581 Motor vehicles 4,477 2,140 - (1,806) 4,811 Office equipment, furniture and fittings 19,193 7,293 (30) (6,751) 19,705 Office renovation 6,045 2,799 (790) (1,836) 6,218 Simulator equipment 1,152 24 - (38) 1,138 Operating plant and ground equipment 10,894 2,933 (2) (4,030) 9,795 In flight equipment 1,381 83 (319) (329) 816 Training equipment 2,176 71 - (884) 1,363

8,586,146 1,896,197 (129,137) (567,176) 9,786,030

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12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Accumulated Accumulated impairment Net book Cost depreciation loss value RM’000 RM’000 RM’000 RM’000

Company

At 31 December 2012

Aircraft engines, airframe and service potential 11,830,322 (2,266,573) - 9,563,749 Aircraft spares 253,714 (111,524) (16,983) 125,207 Aircraft fixtures and fittings 83,180 (64,533) - 18,647 Buildings 41,204 (6,623) - 34,581 Motor vehicles 20,746 (15,935) - 4,811 Office equipment, furniture and fittings 62,258 (42,553) - 19,705 Office renovation 17,348 (11,130) - 6,218 Simulator equipment 4,967 (3,829) - 1,138 Operating plant and ground equipment 35,989 (26,194) - 9,795 In flight equipment 1,732 (916) - 816 Training equipment 4,419 (3,056) - 1,363

12,355,879 (2,552,866) (16,983) 9,786,030

At Impairment Depreciation At 1 January 2011 Additions Disposals loss charge 31 December 2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company

Net book value

Aircraft engines, airframe and service potential 9,045,624 1,210,565 (1,354,961) - (521,438) 8,379,790 Aircraft spares 125,781 22,843 (1,198) (16,983) (21,039) 109,404 Aircraft fixtures and fittings 22,763 6,031 (2,940) - (10,199) 15,655 Buildings 37,387 - - - (1,408) 35,979 Motor vehicles 6,177 585 - - (2,285) 4,477 Office equipment, furniture and fittings 17,987 7,600 (404) - (5,990) 19,193 Officerenovation 2,798 4,705 - - (1,458) 6,045 Simulator equipment 45,684 21,869 (65,038) - (1,363) 1,152 Operating plant and ground equipment 9,408 5,753 (4) - (4,263) 10,894 In flight equipment 1,057 664 (28) - (312) 1,381 Training equipment 1,926 1,250 - - (1,000) 2,176

9,316,592 1,281,865 (1,424,573) (16,983) (570,755) 8,586,146

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Accumulated Accumulated impairment Net book Cost depreciation loss value RM’000 RM’000 RM’000 RM’000

Company

At 31 December 2011

Aircraft engines, airframe and service potential 10,127,194 (1,747,404) - 8,379,790 Aircraft spares 216,049 (89,662) (16,983) 109,404 Aircraft fixtures and fittings 71,524 (55,869) - 15,655 Buildings 41,204 (5,225) - 35,979 Motor vehicles 18,606 (14,129) - 4,477 Office equipment, furniture and fittings 55,119 (35,926) - 19,193 Office renovation 15,339 (9,294) - 6,045 Simulator equipment 4,943 (3,791) - 1,152 Operating plant and ground equipment 33,529 (22,635) - 10,894 In flight equipment 1,968 (587) - 1,381 Training equipment 4,348 (2,172) - 2,176

10,589,823 (1,986,694) (16,983) 8,586,146

At 1 January 2011

Aircraft engines, airframe and service potential 10,476,156 (1,423,536) (6,996) 9,045,624 Aircraft spares 195,155 (69,374) - 125,781 Aircraft fixtures and fittings 71,504 (48,741) - 22,763 Buildings 41,204 (3,817) - 37,387 Motor vehicles 18,021 (11,844) - 6,177 Office equipment, furniture and fittings 48,462 (30,475) - 17,987 Office renovation 10,634 (7,836) - 2,798 Simulator equipment 55,988 (10,304) - 45,684 Operating plant and ground equipment 28,121 (18,713) - 9,408 In flight equipment 1,385 (328) - 1,057 Training equipment 3,098 (1,172) - 1,926

10,949,728 (1,626,140) (6,996) 9,316,592

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reports and financial statements Notes to the Financial Statements 31 December 2012

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Included in property, plant and equipment of the Group and the Company are assets with the following net book values:

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Net book value of owned aircraft sub-leased out 3,494,822 3,068,452 3,445,485 Aircraft pledged as security for borrowings (Note 29) 9,561,999 8,363,292 9,030,028 Simulator pledged as security for borrowings (Note 29) - - 41,371 Motor vehicles on hire-purchase - - 16

The beneficial ownership and operational control of aircraft pledged as security for borrowings rests with the Company when the aircraft is delivered to the Company.

Where the legal title to the aircraft is held by financiers during delivery, the legal title will be transferred to the Company only upon settlement of the respective facilities.

13 INVESTMENT IN SUBSIDIARIES Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Unquoted investments, at cost 27,316 27,316 27,316 Less: Accumulated impairment losses (3,836) (3,836) (1,932)

23,480 23,480 25,384

Company

2012 2011 RM’000 RM’000

At 1 January 23,480 25,384 Additional investment in a subsidiary - -

23,480 25,384 Less: Impairment loss in investment in a subsidiary - (1,904)

At 31 December 23,480 23,480 13 INVESTMENT IN SUBSIDIARIES (continued)

The details of the subsidiaries are as follows:

Country of Group’s effective Name incorporation equity interest Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

Directly held by the Company

Crunchtime Culinary Malaysia - 100.0 100.0 Provision of in flight Services Sdn Bhd ** meals, previously dormant

AirAsia Investment Ltd Malaysia 100.0 100.0 100.0 Investment holding (“AAIL”)

AirAsia Go Holiday Sdn Bhd Malaysia 100.0 100.0 100.0 Tour operating business (“AGH”)

AirAsia (Mauritius) Limited* Mauritius 100.0 100.0 100.0 Providing aircraft leasing facilities to Thai AirAsia Co. Ltd

Airspace Communications Malaysia - 100.0 100.0 Media owner with publishing division, Sdn Bhd ** previously dormant

AirAsia (B) Sdn Bhd ** Negara Brunei - 100.0 100.0 Providing air transportation services, Darussalam previously dormant

AirAsia Corporate Malaysia 100.0 100.0 100.0 Facilitate business transactions for Services Limited * AirAsia Group with non-resident goods and service providers

Aras Sejagat Sdn Bhd Malaysia 100.0 100.0 100.0 Special purpose vehicle for financing arrangements required by AirAsia

Koolred Sdn Bhd Malaysia 100.0 100.0 100.0 Investment holding (“Koolred”)

Asia Air Limited * United Kingdom 100.0 100.0 100.0 To provide and promote AirAsia’s in flight food tothe European market, currently dormant

Held by AGH

AirAsia Exp Pte. Ltd Singapore 100.0 100.0 - Investment holding (“AAE”) *

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reports and financial statements Notes to the Financial Statements 31 December 2012

13 INVESTMENT IN SUBSIDIARIES (continued)

The details of the subsidiaries are as follows: (continued)

Country of Group’s effective Name incorporation equity interest Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

Held by AAIL

AirAsia (Hong Kong) Hong Kong - 100.0 100.0 Dormant Limited **

AirAsia Capital Ltd * Malaysia 100.0 100.0 100.0 Dormant

* Not audited by PricewaterhouseCoopers, Malaysia ** Approved for strike off from Companies Commission of Malaysia / Brunei Darussalam Government Gazette / Companies Registry of Hong Kong

14 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Represented by: Unquoted investments, at cost 123,728 123,728 12,054 81,559 81,559 - Share of post-acquisition reserves 9,081 (74) (12,054) - - - Effects of change in classification from jointly controlled entity to associates (12,054) - - - - -

120,755 123,654 - 81,559 81,559 - 14 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (continued)

The details of the jointly controlled entity are as follows:

Country of Group’s effective Name incorporation equity interest Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

Think Big Digital Sdn Bhd Malaysia 50.0 50.0 - Financial services (“BIG”)

Asian Aviation Centre Malaysia 50.0 50.0 - Aviation training of Excellence Sdn Bhd

Held by AAIL

Thai AirAsia Co. Ltd (“TAA”) Thailand 45.0* 48.9 48.9 Commercial air transport services

Held by AAE

AAE Travel Pte Ltd Singapore 50.0 50.0 - Online travel agency (“AAE Travel”)

Held by AAE Travel

AAEXP Malaysia Sdn Bhd Malaysia 50.0 - - Online travel agency

* Reclassified as investment in associate (Note 15)

At the end of the previous financial year, the unrecognised amount of the Group’s share of losses of TAA which has not been equity accounted for amounted to RM28.5 million (1.1.2011: RM127.8 million).

Subsequent to the intial public offering of Asia Aviation Plc, the major shareholder of TAA, the Group’s effective interest in TAA reduced from 48.9% to 45%. As a consequence of the reduction in shareholding, TAA ceased to be a jointly controlled entity of the Group and became an associate of the Group. Accordingly, in the current financial year, the Group reclassified its investment in TAA from investment in jointly controlled entities to investment in associates as disclosed in Note 15 to the financial statements.

In accordance with the provisions of MFRS131, Interests in Joint Ventures, this has resulted in a RM120.1 million gain on the disposal of the 4% equity interest and a fair value gain on the remaining 45% equity interest in TAA of RM1,040.3 million. The total gain is presented in the income statement as a ’Fair value and gain on disposal of interest in Thai AirAsia Co. Ltd.’

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reports and financial statements Notes to the Financial Statements 31 December 2012

14 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES (continued)

The Group’s share of the results of the jointly controlled entities, which has been equity accounted for, is as follows:

2012 2011 RM’000 RM’000

Revenue 158,591 61,334 Net (loss)/profit for the financial year (2,899) 11,980

The Group’s share of assets and liabilities of the jointly controlled entities is as follows:

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Non-current assets 117,864 97,546 - Current assets 53,018 51,137 - Current liabilities (50,127) (25,029) -

Share of net assets of the jointly controlled entities 120,755 123,654 -

The Group discontinued recognition of its share of profits made by BIG as the Group’s interest in the joint venture has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the joint venture. As at 31 December 2012, the unrecognised amounts of the Group’s share of losses of BIG which have not been equity accounted for amounted to RM9.8 million (31.12.2011: RM4.4 million; 1.1.2011: RM Nil).

15 INVESTMENTS IN ASSOCIATES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Unquoted investments, at cost 1,213,010 48,843 4,141 29 29 29 Group’s share of post-acquisition losses (8,435) (9,764) (4,112) - - -

1,204,575 39,079 29 29 29 29 15 INVESTMENTS IN ASSOCIATES (continued)

The details of the associates are as follows:

Country of Group’s effective Name incorporation equity interest Principal activities 31.12.2012 31.12.2011 1.1.2011 % % %

AirAsia Philippines Inc Philippines 39.9 39.9 39.9 Providing air transportation services, currently dormant

Asian Contact Centres Malaysia 50.0 50.0 50.0 Providing end-to-end solutions for Sdn. Bhd. customers contact management and contact centre

Held by AAIL

PT Indonesia AirAsia (“IAA”) Indonesia 48.9 48.9 48.9 Commercial air transport services

Thai AirAsia Co. Ltd (“TAA”) Thailand 45.0 48.9** 48.9** Commercial air transport services

AirAsia Go Holiday Co. Ltd Thailand 49.0 49.0 49.0 Tour operating business, currently dormant

AirAsia Inc (“PAA”) Philippines 40.0 40.0 40.0 Commercial air transport services

AirAsia Japan Co., Ltd (“JAA”) Japan 49.0 49.0 - Commercial air transport services

AirAsia Pte Ltd * Singapore - 48.9 48.9 Dormant

Held by Koolred

Flight Focus Pte Ltd Singapore 19.4 *** 20.0 - Aeronautical services

Merlot Aero Limited New Zealand 17.5 *** 12.5 - Aeronautical services

* Approved for strike off ** Classified as investment in jointly controlled entity (Note 14) *** Reclassified from investments in associates to available-for-sale financial assets as disclosed in Note 16 to the financial statements

The Group’s share of the results of associates, which has been equity accounted for, is as follows:

2012 2011 RM’000 RM’000

Revenue 918,649 271 Net profit/(loss) for the financial year 1,329 (5,652) 245 ad a Berh AirAsi 246 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

15 INVESTMENTS IN ASSOCIATES (continued)

The Group’s share of assets and liabilities of the associates is as follows:

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Non-current assets 1,191,149 17,488 - Current assets 321,710 29,860 29 Current liabilities (223,088) (8,201) - Non-current liabilities (85,196) (68) -

Share of net assets of associates 1,204,575 39,079 29

The Group discontinued recognition of its share of profits made by IAA as the Group’s interest in this associate has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the associate. As at 31 December 2012, the unrecognised amounts of the Group’s share of losses of IAA which have not been equity accounted for amounted to RM163.2 million (31.12.2011: RM186.0; 1.1.2011: RM196.6 million).

The Group discontinued recognition of its share of profits made by PAA as the Group’s interest in this associate has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the associate. As at 31 December 2012, the unrecognised amounts of the Group’s share of losses of PAA which have not been equity accounted for amounted to RM26.6 million (31.12.2011: RM Nil; 1.1.2011: RM Nil).

The Group discontinued recognition of its share of profits made by JAA as the Group’s interest in this associate has been reduced to zero and the Group has not incurred any obligations or guaranteed any obligations in respect of the associate. As at 31 December 2012, the unrecognised amounts of the Group’s share of losses of JAA which have not been equity accounted for amounted to RM0.3 million (31.12.2011: RM Nil; 1.1.2011: RM Nil).

As at 31 December 2011 and 1 January 2011, Thai AirAsia was a jointly controlled entity of the Group. As explained in Note 14 to the financial statements, Thai AirAsia is now an associate of the Group.

16 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Group

2012 2011 RM’000 RM’000

Non-current

At 1 January 152,942 152,942 Reclassified from investments in associates (Note 15) 12,810 - Additions 32,756 - Fair value gain – recognised in other comprehensive income 110,284 -

At 31 December 308,792 152,942

16 AVAILABLE-FOR-SALE FINANCIAL ASSETS (continued)

Company

2012 2011 RM’000 RM’000

Non-current

At 1 January 152,942 152,942 Additions 32,756 - Fair value gain – recognised in other comprehensive income 110,284 -

At 31 December 295,982 152,942

The Group has investments in Tune Ins Holdings Berhad (“TIH”), AirAsia X Berhad (“AAX”), Flight Focus Pte Ltd (“Flight Focus”) and Merlot Aero Limited (“Merlot”) which are classified as available-for-sale financial assets.

(a) During the current financial year, the Company exercised its rights under the Call Option Agreement with TIH and Tune Money Sdn Bhd to purchase 121,677,000 ordinary shares of RM0.10 each in TIH, for a consideration of RM16.0 million, representing 20% of the issued and paid up share capital of TIH of 608,385,080 shares. The fair value of the investment in TIH is based on a multiple of net assets derived from similar market transactions at the valuation date.

Subsequent to the balance sheet date, TIH was listed on the Main Market of Bursa Securities Malaysia following an initial public offering of shares at a price of RM1.35 per share.

(b) During the financial year, the Company increased its investment in AAX from 16% to 18.3% via the purchase of 6,252,919 ordinary shares for a consideration of RM16.8 million. The fair value of the investment in AAX is based on a multiple of expected future earnings derived from available market data.

The valuation of an available-for-sale equity investment requires a high degree of subjectivity and significant judgment. In making this judgment, the Group is dependent on the key bases and assumptions which include the short term business outlook for the investee, including factors such as industry performance, prospects for public listing, changes in technology, operational and financing cash flows, and the regulatory environment.

(c) The investments in Flight Focus and Merlot, held by Koolred, were reclassified from investments in associates during the financial year under review. The investment in Flight Focus was diluted to 19.4% from 20.0% in the previous financial year and Koolred ceased to have board representation in Merlot. As a consequence, Koolred ceased to exert significant influence over either investee entity such that the investments have been reclassified as available-for-sale financial assets, carried at their fair values.

The maximum exposure to credit risk at the reporting date is the carrying value of the securities classified as available-for-sale. These financial assets are neither past due nor impaired.

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17 GOODWILL

Group

2012 2011 RM’000 RM’000

Cost

At 1 January 7,334 8,738 Impairment loss charged for the year (Note 6) - (1,404)

At 31 December 7,334 7,334

The carrying amount of goodwill allocated to the Group’s cash-generating unit (“CGU”) is as follows:

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Cost

AirAsia Investment Ltd (“AAIL”) 7,334 7,334 7,334 Crunchtime Culinary Services Sdn Bhd (“Crunchtime”) - - 1,404

7,334 7,334 8,738

During the previous financial year, management performed an annual assessment on the carrying amount of goodwill allocated to Crunchtime which was dormant.

Arising from the above assessment, the Group recognised an impairment charge of RM1,404,000 during the financial year ended 31 December 2011.

18 DEFERRED TAXATION

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheets:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deferred tax assets 361,396 516,100 719,260 361,396 516,151 719,260 18 DEFERRED TAXATION (continued)

The movements in the deferred tax assets and liabilities of the Group and the Company during the financial year are as follows:

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

At start of financial year 516,100 719,260 516,151 719,260

(Charged)/credited to income statement (Note 10) - Property, plant and equipment (241,753) (208,908) (241,804) (208,857) - Tax incentives 87,049 5,748 87,049 5,748

(154,704) (203,160) (154,755) (203,109)

At end of financial year 361,396 516,100 361,396 516,151

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deferred tax assets (before offsetting)

Tax incentives 1,084,532 997,483 991,735 1,084,532 997,483 991,735 Tax losses 9,171 9,171 9,171 9,171 9,171 9,171

1,093,703 1,006,654 1,000,906 1,093,703 1,006,654 1,000,906 Offsetting (732,307) (490,554) (281,646) (732,307) (490,503) (281,646)

Deferred tax assets (after offsetting) 361,396 516,100 719,260 361,396 516,151 719,260

Deferred tax liabilities (before offsetting)

Property, plant and equipment (732,307) (490,554) (281,646) (732,307) (490,503) (281,646) Offsetting 732,307 490,554 281,646 732,307 490,503 281,646

Deferred tax liabilities (after offsetting) ------

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18 DEFERRED TAXATION (continued)

As disclosed in Note 3 to the financial statements in respect of critical accounting estimates and judgments, the deferred tax assets are recognised on the basis of the Group’s previous history of recording profits, and to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Estimating the future taxable profits involves significant assumptions, especially in respect of fares, load factor, fuel price, maintenance costs and currency movements. These assumptions have been built based on past performance and adjusted for non-recurring circumstances and a reasonable growth rate.

The Ministry of Finance has granted approval to the Company under Section 127 of Income Tax Act, 1967 for income tax exemption in the form of an Investment Allowance (“IA”) of 60% on qualifying expenditure incurred within a period of 5 years commencing 1 July 2009 to 30 June 2014, to be set off against 70% of the statutory income for each year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. The amount of income exempted from tax is credited to a tax-exempt account from which tax-exempt dividends can be declared.

19 RECEIVABLES AND PREPAYMENTS

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non-current:

Trade receivables 28,141 - - 28,141 - - Prepayments - 15,548 23,593 - 15,548 23,593

28,141 15,548 23,593 28,141 15,548 23,593

Current:

Trade receivables 97,774 123,269 105,325 84,690 107,930 93,911 Less: Allowance for impairment (1,458) (1,458) (1,994) (1,458) (1,458) (1,994)

96,316 121,811 103,331 83,232 106,472 91,917

Other receivables 160,057 143,746 124,045 139,741 130,623 110,815 Less: Allowance for impairment (1,608) (1,608) (1,072) (1,608) (1,608) (1,072)

158,449 142,138 122,973 138,133 129,015 109,743

Prepayments 734,530 472,443 326,049 734,528 472,302 325,516 Deposits for maintenance of aircraft 64,014 50,352 38,034 64,014 50,352 38,034 Deposits – cash collateral for derivatives 226,279 238,489 177,729 226,279 238,489 177,729 Other deposits 77,506 84,542 73,006 77,428 84,495 72,982

1,357,094 1,109,775 841,122 1,323,614 1,081,125 815,921

Credit terms of trade receivables range from 30 to 60 days (31.12.2011: 30 to 60 days; 1.1.2011: 30 to 60 days).

19 RECEIVABLES AND PREPAYMENTS (CONTINUED)

(i) Financial assets that are neither past due nor impaired

Receivables that are neither past due nor impaired of RM183,324,000 and RM149,924,000 (31.12.2011: RM198,242,000 and RM169,780,000; 1.1.2011: RM172,135,000 and RM147,491,000) for the Group and Company respectively. These are substantially companies with good collection track records with the Group and Company.

(ii) Financial assets that are past due but not impaired

Receivables that are past due but not impaired amounted to RM71,441,000 (31.12.2011: RM65,707,000; 1.1.2011: RM54,169,000) for the Group and Company. These are related to a number of independent customers which have no recent history of default. The ageing analysis of these receivables that are past due but not impaired is as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Up to 3 months 20,786 24,166 15,766 Over 3 months 50,655 41,541 38,403

71,441 65,707 54,169

(iii) Financial assets that are past due and/or impaired

The carrying amount of receivables individually determined to be impaired are as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Over 3 months 3,066 3,066 3,066 Less: Allowance for impairment (3,066) (3,066) (3,066)

- - -

The individually impaired receivables are mainly related to disputed balances with customers or balances for which management is of the view that the amounts may not be recoverable.

The other classes within trade and other receivables do not contain impaired assets.

Deposits of the Group and Company at the balance sheet date are with a number of external parties for which there is no expectation of default.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group and Company do not hold any collateral as security. 251 ad a Berh AirAsi 252 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

19 RECEIVABLES AND PREPAYMENTS (CONTINUED)

The currency profile of receivables and deposits (excluding prepayments) is as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 50,701 208,305 122,123 50,701 208,255 97,466 US Dollar 453,959 361,610 353,417 420,481 333,151 353,417 Others 146,045 67,417 39,533 146,045 67,417 39,522

650,705 637,332 515,073 617,227 608,823 490,405

Prepayments include advances for purchases of fuel and prepaid engine maintenance to the service provider.

The carrying amounts of the Group’s and the Company’s trade and other receivables approximate their fair values.

20 DEPOSITS ON AIRCRAFT PURCHASE

Deposits on aircraft purchases represent amounts advanced towards the final cost of aircraft to be delivered to the Company.

21 AMOUNTS DUE FROM/(TO) ASSOCIATES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amounts due from associates 780,985 803,106 280,350 780,985 803,106 280,350 Amount due to an associate (29,032) (4,444) (5,223) (68,052) (4,444) (5,223)

751,953 798,662 275,127 712,933 798,662 275,127

The analysis of the movements in the amounts due from associates is as follows:

Group and Company

2012 2011 RM’000 RM’000

At 1 January 803,106 280,350 Income, recharges and other expenses 594,845 427,103 (Repayment)/advance for purchase of aircraft (70,110) 565,965 Receipts and settlements (534,652) (492,908) Foreign exchange gain/(loss) on translation (12,204) 10,403 Unwinding of discount on receivables - 12,193

At 31 December 780,985 803,106 21 AMOUNTS DUE FROM/(TO) ASSOCIATES (continued)

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Current 331,407 289,492 162,386 Non-current 449,578 513,614 117,964

780,985 803,106 280,350

Amounts due from associates include an amount of RM495,855,000 (31.12.2011: RM565,965,000; 1.1.2011: RM Nil) relating to advances to PT Indonesia AirAsia (“IAA”) for purchase of aircraft in 2011 for the financing of aircraft purchase and are repayable over a term of up to 9 years at interest rates between 6.16% to 6.65% per annum. From this amount of RM495,855,000, RM449,578,000 (31.12.2011: RM513,614,000; 1.1.2011: RM Nil) is repayable after 12 months. The Company holds the aircraft as collateral. Other amounts due from associates were charged interest at 6% per annum with effect from 1 January 2010.

(i) Financial assets that are neither past due nor impaired

Amounts due from associates that are neither past due nor impaired of the Group and Company amounted to RM693,902,000 (31.12.2011: RM695,336,000; 1.1.2011: RM130,200,000).

The Group and Company have not made any impairment as management is of the view that these amounts are recoverable.

(ii) Financial assets that are past due but not impaired

Amounts due from associates of the Group and Company that are past due but not impaired amounted to RM87,083,000 (31.12.2011: RM107,770,000; 1.1.2011: RM150,150,000). The ageing analysis of these amounts is as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Up to 3 months 87,083 106,776 130,200 Over 3 months - 994 19,950

87,083 107,770 150,150

The maximum exposure to credit risk at the reporting date is the carrying value of the amounts due from associates mentioned above. Other than as disclosed above, the Group and Company do not hold any collateral as security.

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21 AMOUNTS DUE FROM/(TO) ASSOCIATES (CONTINUED)

The currency profile of the amounts due from/(to) associates is as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amounts due from associates - US Dollar 779,307 798,586 268,058 779,307 798,586 268,058 - Philippines Peso 1,678 4,520 12,292 1,678 4,520 12,292

780,985 803,106 280,350 780,985 803,106 280,350

Amounts due to an associate - Singapore Dollar - (4,444) (5,223) - (4,444) (5,223) - US Dollar (29,032) - - (68,052) - -

(29,032) (4,444) (5,223) (68,052) (4,444) (5,223)

22 DERIVATIVE FINANCIAL INSTRUMENTS

Group and Company

31.12.2012 31.12.2011 1.1.2011

Assets Liabilities Assets Liabilities Assets Liabilities RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non-current

Interest rate swaps – cash flow hedges - (368,984) - (337,083) - (211,457) Interest rate swaps – held for trading - (95,463) - (113,847) - (105,545) Interest rate caps – held for trading 2,364 - 5,507 - 23,306 - Forward foreign exchange contracts – cash flow hedges 34,125 (39,782) 36,329 (32,124) 2,238 (132,656) Forward foreign exchange contracts – held for trading 1,184 (5,979) 2,975 (5,267) - (3,207)

Total 37,673 (510,208) 44,811 (488,321) 25,544 (452,865) 22 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Group and Company

31.12.2012 31.12.2011 1.1.2011

Assets Liabilities Assets Liabilities Assets Liabilities RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Current

Interest rate swaps – held for trading - (29,950) - (35,322) - - Forward foreign exchange contracts – held for trading - (5,469) - (2,689) - - Commodity derivatives – cash flow hedges - - 3,428 - - - Commodity derivatives – held for trading - - 4,231 - - -

Total - (35,419) 7,659 (38,011) - -

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedge item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months. Derivatives held for trading are those which do not qualify for hedge accounting.

The ineffective portion recognised in the Group’s and Company’s income statement arising from cash flow hedges amounted to a loss of RM0.085 million (2011: RM1.7 million gain) (Note 7).

31.12.2012 31.12.2011 1.1.2011

Notional Fair Notional Fair Notional Fair amount value amount value amount value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Interest rate caps 371,746 2,364 427,544 5,507 635,877 23,306 Interest rate swaps 4,090,465 (494,397) 3,789,186 (486,251) 2,684,830 (317,000) Cross currency interest rate swaps 158,540 (14,238) 180,660 (12,481) 198,491 (11,357) Forward foreign exchange contracts 3,664,530 (1,683) 3,616,486 11,705 3,522,199 (122,270) Commodity derivatives - - 1,200,000* 7,659 - -

*: in barrels

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22 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

(i) Forward foreign exchange contracts

The notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2012 were RM3.823 billion (31.12.2011: RM3.797 billion; 1.1.2011: RM3.721 billion).

As at 31 December 2012, the Group has hedged approximately 59% (31.12.2011: 64%; 1.1.2011: 60%) of its USD liabilities pertaining to its aircraft, engine and simulator loans into Malaysian Ringgit (“RM”) by using long dated foreign exchange forward contracts to manage its foreign currency risk. The latest weighted average of USD:RM forward exchange rate is 3.2245 (31.12.2011: 3.2392; 1.1.2011: 3.2528). Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 31 December 2012 will be continuously released to the income statement within foreign exchange gains/(losses) on borrowings until the full repayment of the term loans (refer Note 29 to the financial statements).

(ii) Interest rate hedging

The notional principal amounts of the outstanding interest rate contracts at 31 December 2012 were RM4.462 billion (31.12.2011: RM4.217 billion; 1.1.2011: RM3.320 billion).

The Group has entered into interest rate contracts to hedge against fluctuations in the USD LIBOR on its existing and highly probable future floating rate aircraft financing for aircraft delivered from 2005 to 2013. As at 31 December 2012, the Group has hedged 82% (31.12.2011:100%; 1.1.2011: 100%) of its existing and future floating aircraft loans at rates from 1.80% to 5.20% per annum (31.12.2011: 2.05% to 5.20% per annum; 1.1.2011: 3.25% to 5.20% per annum) via interest rate swaps, interest rate caps and cross-currency swaps. Out of the RM8.41 billion (31.12.2011: RM7.78 billion; 1.1.2011: RM7.86 billion) borrowings, the Group has hedged 30% (31.12.2011: 15%; 1.1.2011: 17%) of the term loans and 90% (31.12.2011: 66%; 1.1.2011: 90%) of the finance lease liabilities (Note 29). Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31 December 2012 will be continuously released to the income statement within finance cost until the full repayment of the term loans (refer Note 29 to the financial statements).

(iii) Fuel contracts

The outstanding number of barrels of Brent and Singapore Jet Kerosene derivative contracts at 31 December 2012 was Nil (31.12.2011: 1.2 million; 1.1.2011: Nil).

23. INVENTORIES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Spares and consumables 16,950 13,515 14,304 16,950 13,515 14,304 In flight merchandise and others 6,775 6,215 3,249 6,775 6,215 2,701

23,725 19,730 17,553 23,725 19,730 17,005 24 AMOUNTS DUE FROM SUBSIDIARIES AND A RELATED PARTY

The amounts due from subsidiaries are unsecured, interest bearing and have no fixed terms of repayment. These balances are neither past due nor impaired.

The amount due from a related party is unsecured, interest free and has no fixed term of repayment.

The currency profile of amounts due from subsidiaries and a related party is as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 1,282 - - 26,656 12,240 2,758 US Dollar - - - 149,356 93,169 429,624

1,282 - - 176,012 105,409 432,382

25 AMOUNTS DUE FROM/(TO) JOINTLY CONTROLLED ENTITIES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amounts due from jointly controlled entities 10,765 4,526 99,802 3,066 4,526 - Amounts due to jointly controlled entities - (19,761) - - (50,087) (322,614)

10,765 (15,235) 99,802 3,066 (45,561) (322,614)

Amounts due from/(to) jointly controlled entities are unsecured and have no fixed terms of repayment.

The amounts due from/(to) jointly controlled entity at 31 December 2011 and 1 January 2011 included amount due from/(to) Thai AirAsia Co Ltd (“TAA”) which was denominated in US Dollar, unsecured and had no fixed terms of repayment, and bore interest at a rate equivalent tothe Company’s borrowing rate of 6% per annum with effect from 1 January 2010.

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25 AMOUNTS DUE FROM/(TO) JOINTLY CONTROLLED ENTITIES (CONTINUED)

The analysis of the movements in the amounts due from/(to) jointly controlled entities for the financial year ended 31 December 2012 is as follows:

Group

2012 2011 RM’000 RM’000

Current

At 1 January (15,235) 99,802 Income, recharges other expenses 514,186 426,647 Receipts and settlements (476,740) (550,882) Foreign exchange loss on translation (2,178) (1,265) Unwinding on discount on receivables - 10,463 Reclassified as amounts due from/(to) associates (9,268) -

At 31 December 10,765 (15,235)

The currency profile of the amounts due from/(to) jointly controlled entities is as follows:

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Amounts due to jointly controlled entities - US Dollar - (15,577) - - Singapore Dollar - (4,184) -

- (19,761) -

Amounts due from jointly controlled entities - US Dollar - - 99,802 - Ringgit Malaysia 3,066 4,526 - - Singapore Dollar 7,699 - -

10,765 4,526 99,802

10,765 (15,235) 99,802

26 CASH AND CASH EQUIVALENTS

For the purposes of the cash flow statements, cash and cash equivalents include the following:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and bank balances 1,552,043 1,339,527 681,859 1,489,408 1,314,229 676,303 Deposits with licensed banks 571,425 659,237 719,439 568,328 659,237 719,439 Short term deposits with fund management companies 109,263 106,246 103,319 109,263 106,246 103,319

Deposits, cash and bank balances 2,232,731 2,105,010 1,504,617 2,166,999 2,079,712 1,499,061 Deposits pledged as Securities (13,488) (12,394) (28,789) (13,488) (12,394) (28,789)

2,219,243 2,092,616 1,475,828 2,153,511 2,067,318 1,470,272

The currency profile of deposits, cash and bank balances is as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 989,551 818,728 784,672 986,161 817,261 783,031 US Dollar 203,848 216,220 211,677 141,550 192,570 207,851 Singapore Dollar 133,847 287,258 172,680 133,812 287,234 172,640 Australian Dollar 118,736 254,833 118,327 118,736 254,828 118,327 Chinese Renminbi 419,699 163,696 63,898 419,699 163,696 63,898 Hong Kong Dollar 32,529 132,185 63,428 32,529 132,167 63,428 India Rupee 116,547 87,934 41,802 116,547 87,944 41,802 Thai Baht 5,788 3,019 17,403 5,783 2,885 17,361 Indonesian Rupiah 144,678 82,941 10,691 144,678 82,941 10,691 Brunei Dollar 10,557 9,058 9,288 10,557 9,058 9,288 Euro 2,749 4,704 397 2,748 4,704 392 Philippine Peso 6,439 4,468 - 6,439 4,468 - Vietnamese Dong 28,107 15,544 - 28,107 15,544 - British Pound 9,766 19,717 - 9,763 19,717 - Others 9,890 4,705 10,354 9,890 4,695 10,352

2,232,731 2,105,010 1,504,617 2,166,999 2,079,712 1,499,061

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26 CASH AND CASH EQUIVALENTS (CONTINUED)

The deposits with licensed banks of the Group and Company amounting to RM13,488,000 (31.12.2011: RM12,394,000; 1.1.2011: RM28,789,000) are pledged as securities for banking facilities granted to the Group and Company (Note 29).

The weighted average effective annual interest rates of deposits at the balance sheet dates are as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 % % % % % %

Deposits with licensed banks 3.00 2.80 2.62 3.00 2.80 2.62

Short term deposits with fund management companies 2.80 2.83 2.64 2.80 2.83 2.64

27 TRADE AND OTHER PAYABLES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trade payables 65,134 81,268 53,178 42,652 57,428 31,710 Accrual for fuel 165,973 162,577 121,725 165,973 162,577 121,725 Aircraft maintenance accruals 628,917 409,628 254,036 628,917 409,628 254,036 Other payables and accruals 435,041 483,759 484,004 429,382 473,430 476,873

1,295,065 1,137,232 912,943 1,266,924 1,103,063 884,344

Other payables and accruals include accruals for operational expenses payable to airport authorities and passenger service charge.

The currency profile of trade and other payables is as follows:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 107,439 525,939 343,518 107,439 525,939 314,919 US Dollar 1,131,763 583,942 553,608 1,103,622 549,773 553,608 Others 55,863 27,351 15,817 55,863 27,351 15,817

1,295,065 1,137,232 912,943 1,266,924 1,103,063 884,344 28 AMOUNTS DUE TO SUBSIDIARIES AND A RELATED PARTY

The amounts due to subsidiaries and a related party are denominated in Ringgit Malaysia, unsecured, interest free and are repayable on demand.

29 BORROWINGS

Group and Company

Weighted average rate of finance

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 % % % RM’000 RM’000 RM’000

Current: Secured

Term loans 4.42 4.02 4.09 637,860 498,501 493,211 Finance lease liabilities 5.67 3.02 5.50 58,193 86,248 51,689 Commodity Murabahah Finance 4.95 4.92 4.46 10,101 9,482 9,067 Sukuk 4.85 4.85 4.85 420,000 - -

1,126,154 594,231 553,967

Non-current: Secured

Term loans 4.42 4.02 4.09 6,446,740 5,376,455 5,906,715 Finance lease liabilities 5.67 3.02 5.50 757,060 1,300,834 876,929 Commodity Murabahah Finance 4.95 4.92 4.46 79,385 89,630 99,240 Sukuk 4.85 4.85 4.85 - 420,000 420,000

7,283,185 7,186,919 7,302,884

Total borrowings 8,409,339 7,781,150 7,856,851

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29 BORROWINGS (CONTINUED)

The Group’s borrowings are repayable as follows:

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Not later than 1 year 1,126,154 594,231 553,967 Later than 1 year and not later than 5 years 3,180,247 3,078,462 2,863,736 Later than 5 years 4,102,938 4,108,457 4,439,148

8,409,339 7,781,150 7,856,851

The currency profile of borrowings is as follows:

Ringgit Malaysia 509,486 519,112 528,307 US Dollar 7,562,154 7,137,886 7,204,819 Euro 122,536 124,152 123,725 Singapore Dollar 215,163 - -

8,409,339 7,781,150 7,856,851

The carrying amounts and fair values of the non-current borrowings are as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011

Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Term loans 6,446,740 5,230,360 5,376,455 4,422,920 5,906,715 4,743,235 Finance lease liabilities 757,060 561,692 1,300,834 1,083,215 876,929 617,939 Commodity Murabahah Finance 79,385 65,988 89,630 72,684 99,240 80,085 Sukuk - - 420,000 400,572 420,000 382,043

7,283,185 5,858,040 7,186,919 5,979,391 7,302,884 5,823,302

The fair values of the borrowings classified as current liabilities, equal their carrying amounts, as the impact of discounting is not significant.

The fair values of the non-current borrowings are based on cash flows discounted using borrowing rates of 4.42% to 5.67% (31.12.2011: 3.02% to 4.92%; 1.1.2011: 3.8%) per annum.

The above term loans, finance lease liabilities (Ijarah) and Commodity Murabahah Finance are for the purchase of aircraft, spare engines and simulators.

29 BORROWINGS (CONTINUED)

The repayment terms of term loans and finance lease liabilities are on a quarterly or semi-annually basis. These are secured by the following:

(a) Assignment of rights under contract with Airbus over each aircraft;

(b) Assignment of insurance of each aircraft; and

(c) Assignment of airframe and engine warranties of each aircraft.

The Commodity Murabahah Finance is secured by a second priority charge over the aircraft.

The purpose of the Sukuk is to fund the Company’s working capital. The Sukuk is secured by the following:

(i) An unconditional and irrevocable bank guarantee provided by financial institutions; and

(ii) An assignment over the proceeds of the Ijarah Service Reserve Account opened by the Company pursuant to the exercise.

The Group has the following undrawn borrowing facilities:

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Fixed rate: - expiring within one year - - 48,000

30 SHARE CAPITAL

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Authorised:

Ordinary shares of RM0.10 each: At beginning and end of the financial year 500,000 500,000 500,000

Issued and fully paid up:

Ordinary shares of RM0.10 each: At beginning of the financial year 277,809 277,344 275,774 Issued during the financial year 182 465 1,570

At end of the financial year 277,991 277,809 277,344

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30 SHARE CAPITAL (CONTINUED)

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM277,808,558 to RM277,990,658 by way of issuance of 1,821,000 ordinary shares of RM0.10 each pursuant to the exercise of the Employee Share Option Scheme (“ESOS”) at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM1,784,580, has been credited to the Share Premium account.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company. There were no other changes in the issued and paid-up capital of the Company during the financial year.

During the previous financial year, the Company increased its issued and paid-up ordinary share capital from RM277,343,608 to RM277,808,558 by way of issuance of 4,649,500 ordinary shares of RM0.10 each pursuant to the exercise of the ESOS at an exercise price of RM1.08 per share. The premium arising from the exercise of ESOS of RM4,556,510 had been credited to the Share Premium account.

The new ordinary shares issued during the previous financial year ranked pari passu in all respects with the existing ordinary shares of the Company. There were no other changes in the issued and paid-up capital of the Company during the previous financial year.

EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

The Company implemented an ESOS on 1 September 2004 (“the Scheme”). The ESOS is governed by the by-laws which were approved by the shareholders on 7 June 2004 and was effective for a period of 5 years from the date of approval. On 28 May 2009, the Company extended theduration of its ESOS which expired on 6 June 2009 by another 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws. The ESOS extension was not subject to any regulatory or shareholders’ approval.

The main features of the ESOS are as follows:

(a) The maximum number of ordinary shares, which may be allotted pursuant to the exercise of options under the Scheme, shall not exceed ten per cent (10.0%) of the issued and paid-up share capital of the Company at any point in time during the duration of the Scheme.

(b) The Option Committee may from time to time decide the conditions of eligibility to be fulfilled by an Eligible Person in order to participate in the Scheme.

(c) The aggregate number of shares to be offered to any Eligible Person who has fulfilled the eligibility criteria for the time being by way of options in accordance with the Scheme shall be at the discretion of the Option Committee. The Option Committee may consider circumstances such as the Eligible Person’s scope of responsibilities, performance in the Group, rank or job grade, the number of years of service that the Eligible Person has rendered to the Group, the Group’s retention policy and whether the Eligible Person is serving under an employment contract for a fixed duration or otherwise. The Option Committee’s decision shall be final and binding.

(d) The maximum number of shares allocated to Executive Directors, Non-Executive Directors and senior management by way of options shall in aggregate not exceed fifty per cent (50.0%) of the total number of shares (or such other percentage as may be permitted by the relevant regulatory authorities from time to time) available under the Scheme.

(e) The subscription price, in respect of options granted prior to the date of listing in Bursa Malaysia, shall be RM1.08 per share.

(f) The options granted are exercisable one year beginning from the date of grant.

The shares to be allotted and issued upon any valid exercise of options will, upon such allotment and issuance, rank pari passu in all respects with the existing and issued shares except that such shares so issued will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of such shares. The options shall not carry any right to vote at a general meeting of the Company. 30 SHARE CAPITAL (CONTINUED)

The Company granted 93,240,000 options at an exercise price of RM1.08 per share under the ESOS scheme on 1 September 2004, which expired on 6 June 2009. During the financial year ended 31 December 2009, the validity of this ESOS scheme was extended to 6 June 2014.

At 31 December 2012, options to subscribe for 3,739,000 (31.12.2011: 5,560,000; 1.1.2011: 10,437,000) ordinary shares of RM0.10 each at the exercise price of RM1.08 per share remain unexercised. These options granted do not confer any right to participate in any share issue of any other company.

Set out below are details of options over the ordinary shares of the Company granted under the ESOS:

Expiry Exercise At At Grant date date price 1.1.2012 Granted Exercised Lapsed 31.12.2012 RM/share ‘000 ‘000 ‘000 ‘000 ‘000

1 September 2004 6 June 2014 1.08 5,560 - (1,821) - 3,739

Expiry Exercise At At Grant date date price 1.1.2011 Granted Exercised Lapsed 31.12.2011 RM/share ‘000 ‘000 ‘000 ‘000 ‘000

1 September 2004 6 June 2014 1.08 10,437 - (4,650) (227) 5,560

31.12.2012 31.12.2011 1.1.2011 ’000 ’000 ’000

Number of share options vested at balance sheet date 3,739 5,560 10,437

Details relating to options exercised during the financial year are as follows:

Quoted price of shares Number at share Exercise of shares Exercise date issue date price issued RM/share RM/share ‘000

January 2012 to March 2012 3.35 – 3.78 1.08 293 April 2012 to June 2012 3.31 – 3.70 1.08 801 July 2012 to September 2012 2.85 – 3.82 1.08 699 October 2012 to December 2012 2.53 – 3.16 1.08 28

1,821

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30 SHARE CAPITAL (CONTINUED)

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Ordinary share capital at par 182 465 1,570 Share premium 1,785 4,556 15,378

Proceeds received on exercise of share options 1,967 5,021 16,948

Fair value at exercise date of shares issued 6,413 14,222 32,182

31 RETAINED EARNINGS

Under the single-tier tax system introduced by the Finance Act, 2007 which came into effect from the year of assessment 2008, companies are not required to have tax credits under Section 108 of the Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders.

Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013, whichever is earlier, unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provisions of the Finance Act, 2007.

As at 31 December 2012, the Company has sufficient Section 108 tax credits to pay approximately RM Nil (31.12.2011: RM Nil; 1.1.2011: RM19.0 million) of its retained earnings as franked dividends.

In addition, the Company has tax exempt income as at 31 December 2012 amounting to approximately RM Nil (31.12.2011: RM Nil; 1.1.2011: RM0.5 million) available for distribution as tax exempt dividends to shareholders.

32 DIVIDENDS

Dividends declared or proposed by the Company are as follows:

2012 2011

Gross Amount Gross Amount dividend of dividend dividend of dividend per share net of tax per share net of tax Sen RM’000 Sen RM’000

First and final dividend paid in respect of the financial year ended 31 December 2011:

Gross dividend of 0.91 sen per share less 25% tax - - 0.91 18,946 Tax exempt dividend of 0.02 sen per share - - 0.02 555 Single-tiered dividend of 5 sen per share (2011: 2.07 sen per share) 5.00 138,957 2.07 57,464

5.00 138,957 3.00 76,965 32 DIVIDENDS (CONTINUED)

The Board has declared and approved a single-tier interim ‘special’ dividend of 18 sen per ordinary share on 2,779,906,580 ordinary shares of RM0.10 each for the financial year ended 31 December 2012, amounting to a dividend payable of RM500,383,184. The dividend was paid on 12 April 2013 to shareholders whose name appeared in the Record of Depositors at the close of business on 13 March 2013. As the dividend was declared after the balance sheet date, the single-tier interim ‘special’ dividend of RM500,383,184 was not recognised as a liability at the balance sheet date.

In addition to this, the Board recommends a final single-tier dividend in respect of the financial year ended 31 December 2012 of 6 sen per share on 2,780,510,580 ordinary shares of RM0.10 each amounting to RM166,830,635. The final dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting (“AGM”).

33 COMMITMENTS

(a) Capital commitments not provided for in the financial statements are as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Property, plant and equipment: - Approved and contracted for 51,144,087 40,079,667 12,829,657 - Approved but not contracted for 13,756,500 16,841,539 7,931,251

64,900,587 56,921,206 20,760,908

The capital commitments for the Group and Company are in respect of aircraft purchase.

Property, plant and equipment: - Share of a jointly controlled entity’s capital commitments 25,109 - 17,100 - Share of an associate’s capital commitments 8,985 - 8,626

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33 COMMITMENTS (continued)

(b) Non-cancellable operating leases

The future minimum lease payments and sublease receipts under non-cancellable operating leases are as follows:

Group and Company

31.12.2012 31.12.2011 1.1.2011

Future Future Future Future Future Future minimum minimum minimum minimum minimum minimum lease sublease lease sublease lease sublease payments receipts payments receipts payments receipts RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Not later than 1 year 198,800 591,550 143,270 534,854 49,469 422,224 Later than 1 year and not later than 5 years 795,200 2,236,713 547,952 1,626,436 172,266 768,539 Later than 5 years 1,036,015 2,670,361 726,171 438,013 194,136 -

2,030,015 5,498,624 1,417,393 2,599,303 415,871 1,190,763

Sublease receipts include lease receipts from both owned and leased aircraft receivable from Thai AirAsia Co. Ltd, PT Indonesia AirAsia, AirAsia Inc and AirAsia Japan Co. Ltd.

34 CONTINGENT LIABILITIES

At the balance sheet date, there were no contingent liabilities which are expected to have a material impact on the financial statements of the Group or Company.

35 SEGMENTAL INFORMATION

Segmental information is as shown in the income statements, balance sheets and relevant notes as the Group’s sole business segment is the provision of air transportation services. Management has determined the operating segment based on reports that are reviewed and used to make strategic decisions by the Chief Executive Officer who is identified as the chief operating decision maker.

The Group’s operations are conducted predominantly in Malaysia. 36 SIGNIFICANT RELATED PARTY TRANSACTIONS

In addition to the related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party disclosures.

The related parties of the Company and their relationships at 31 December 2012 are as follows:

Related companies Relationship

AirAsia Go Holiday Sdn Bhd Subsidiary AirAsia (Mauritius) Limited Subsidiary AirAsia Investment Limited Subsidiary Koolred Sdn Bhd Subsidiary AirAsia Philippines Inc Associate PT Indonesia AirAsia Associate of a subsidiary AirAsia Inc Associate of a subsidiary AirAsia Pte Limited Associate of a subsidiary Thai AirAsia Co. Ltd Associate of a subsidiary AirAsia Japan Co. Ltd Associate of a subsidiary AAE Travel Pte Ltd Jointly controlled entity of a subsidiary Asian Aviation Centre of Excellence Sdn Bhd Jointly controlled entity AirAsia X Berhad Company with common directors and shareholders AirAsia Asean Inc. Common directors

All related party transactions were carried out on agreed terms and conditions.

Key management personnel are categorised as head or senior management officers of key operating divisions within the Group and Company. The key management compensation is disclosed in Note 36(e) below.

Related party transactions also include transactions with entities that are controlled, jointly controlled or significantly influenced directly or indirectly by any key management personnel or their close family members, where applicable.

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

(a) Income:

Aircraft operating lease income for owned and leased aircraft - Thai AirAsia Co. Ltd 310,553 270,123 310,553 270,123 - PT Indonesia AirAsia 184,323 218,313 184,323 218,313 - AirAsia Inc 26,012 6,980 26,012 6,980 - AirAsia Japan Co. Ltd 13,985 - 13,985 -

Gain on disposal of aircraft to PT Indonesia AirAsia - 61,616 - 61,616

Gain on disposal of aircraft to Thai AirAsia Co. Ltd 9,574 - - -

Services charged to AirAsia X Berhad 6,035 35,833 6,035 35,833 269 ad a Berh AirAsi 270 t epor 2012al R Annu

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36 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

(b) Recharges:

Maintenance and overhaul charges to - PT Indonesia AirAsia - 9,022 - 9,022

Recharges of expenses to - PT Indonesia AirAsia 107,005 97,611 107,005 97,611 - Thai AirAsia Co. Ltd 70,943 86,024 70,943 86,024 - AirAsia Inc 15,337 - 15,337 - - AirAsia Japan Co. Ltd 12,806 - 12,806 -

Recharges of expenses by - Thai AirAsia Co. Ltd (11,502) (30,004) (11,502) (30,004)

(c) Other charges:

Maintenance reserve fund charged to - PT Indonesia Airasia 100,977 79,283 100,977 79,283 - Thai AirAsia Co. Ltd 117,357 93,624 117,357 93,624 - AirAsia Inc 6,543 - 6,543 - - AirAsia Japan Co. Ltd 6,069 - 6,069 -

Interest charges to - PT Indonesia AirAsia 49,417 26,466 49,417 26,466 - Thai AirAsia Co. Ltd - 14,691 - 14,691 - AirAsia Inc 1,590 - 1,590 -

Interest charged by - Thai AirAsia Co. Ltd - (11,058) - (11,058)

(d) Advance for purchase of aircraft:

- PT Indonesia AirAsia - 565,965 - 565,965

(e) Regional expenses receivable:

- AirAsia Asean Inc. 24,498 - 24,498 -

(f) Key management compensation:

- basic salaries, bonus and allowances 22,939 26,285 25,277 26,285 - defined contribution plan 2,390 2,840 2,390 2,840

25,329 29,125 27,667 29,125

Included in the key management compensation are Executive Directors’ remuneration as disclosed in Note 5 to the financial statements. 36 SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

(g) Receivables: - AirAsia (Mauritius) Limited - - - 77,321 53,484 422,415 - AirAsia Investment Limited - - - 72,020 39,670 7,208 - Koolred Sdn Bhd - - - 19,811 12,240 - - AirAsia Go Holiday Sdn Bhd - - - 5,563 - - - Thai AirAsia Co. Ltd - - 99,802 - - - - Asian Aviation Centre of Excellence Sdn Bhd 3,066 4,526 - 3,066 4,526 - - PT Indonesia AirAsia 706,635 796,345 268,058 706,635 796,345 268,058 - AirAsia Philippines Inc 1,678 4,520 12,292 1,678 4,520 12,292 - AirAsia Inc 40,525 2,241 - 40,525 2,241 - - AirAsia Japan Co. Ltd 32,147 - - 32,147 - - - AAE Travel Pte Ltd 7,699 - - - - -

(h) Payables:

- AirAsia Go Holiday Sdn Bhd - - - - 5,605 44,251 - Thai AirAsia Co. Ltd 29,032 15,576 - 68,052 50,087 322,614 - AAE Travel Pte Ltd - 4,185 - - - - - AirAsia Pte Limited - 4,444 5,223 - 4,444 5,223 - AirAsia X Berhad 12,639 10,560 41,262 12,639 10,560 41,262

37 FINANCIAL RISK MANAGEMENT POLICIES

The Group’s activities expose it to market risk (including fuel price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. The Group’s overall risk management programme seeks to minimise adverse effect from the unpredictability of financial markets on the Group’s financial performance. The Group uses financial instruments such as fuel swaps, interest rate swaps and caps, and foreign currency forwards to manage these financial risks.

The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group and the Company. The management team then establishes detailed policies such as risk identification and measurement, exposure limits and risk management strategies. Risk management policies and procedures are reviewed regularly to reflect changes in the market condition and the Group’s activities.

The Group also seeks to ensure that the financial resources that are available for the development of the Group’s businesses are constantly monitored and managed vis-a-vis its ongoing exposure to fuel price, interest rate, foreign currency, credit, liquidity and cash flow risks.

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37 FINANCIAL RISK MANAGEMENT POLICIES (continued)

The policies in respect of the major areas of treasury activities are as follows:

(a) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices such as foreign exchange rates, jet fuel prices and interest rates. The objective of market risk management is to manage and control market risk exposure within acceptable parameters while optimising the return on risk.

(i) Fuel price risk

The Group and Company are exposed to jet fuel price risk arising from the fluctuations in the prices of jet fuel, and seek to hedge their fuel requirements using fuel swaps in order to address the risk of rising fuel prices (Note 22). As at 31 December 2012 and 1 January 2011, there were no existing trades that would impact the post-tax profit for the year and equity. As at 31 December 2011, if USD denominated barrel had been USD5 higher/lower with all other variables held constant, the impact on the post-tax profit for the year end equity are tabulated below:

31.12.2012 31.12.2011 1.1.2011

+USD5 -USD5 +USD5 -USD5 +USD5 -USD5 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Impact on post tax profits - - 13,048 (13,048) - - Impact on other comprehensive income - - 5,931 (5,931) - -

(ii) Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. Fair value interest rate risk is that risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates.

In view of the substantial borrowings taken to finance the acquisition of aircrafts, the Group’s income and operatingcash flows are also influenced by changes in market interest rates. Interest rate exposure arises from the Group’s floating rate borrowings and is managed by entering into derivative financial instruments. Derivative financial instruments are used, as far as possible and where appropriate, to generate the desired fixed interest rate profile. Surplus funds are placed with reputable financial institutions at the most favourable interest rates.

The Group manages its cash flow interest rate risk by entering into a number of immediate and forward starting interest rate swap contracts and cross currency swap contracts that effectively converts its existing and future long-term floating rate debt facilities into fixed rate debts (Note 22). This hedging strategy ensures that the Group is paying a fixed interest expense on its borrowings and that the performance of the Group is not significantly impacted by the fluctuation in interest rates.

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

As at 31 December 2012, 31 December 2011 and 1 January 2011, if interest rate on USD denominated borrowings had been 60 basis points higher/ lower with all other variables held constant, the impact on the post-tax profit for the year and equity arising from the cashflow interest rate risk would be minimal, after considering the hedging of the floating rate loans (Note 22). 37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(a) Market risk (continued)

(ii) Interest rate risk (continued)

At 31 December 2012, if interest rate on USD denominated borrowings had been 60 basis points higher/lower with all other variables held constant, the impact on the post-tax profit for the financial year and equity, as a result of an increase/decrease in the fair value of the interest rate derivative financial instruments under cash flow hedges are tabulated below:

31.12.2012 31.12.2011 1.1.2011

+60bps -60bps +60bps -60bps +60bps -60bps RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Impact on post tax profits 24,969 (20,810) 32,015 (33,344) 12,559 (48,396) Impact on other comprehensive income 116,294 (122,157) 108,443 (105,832) 58,222 (65,511)

The remaining terms of the outstanding interest rate derivative contracts of the Company at 31 December 2012, which are denominated in USD, are as follows:

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Later than 1 year but less than 5 years: Interest rate swaps 15,172 - -

Later than 5 years: Interest rate caps 371,746 427,544 635,877 Interest rate swaps 4,075,293 3,789,186 2,684,830 Cross currency interest rate swaps 158,540 180,660 198,491

4,620,751 4,397,390 3,519,198

(iii) Foreign currency risk

Apart from the Ringgit Malaysia (“RM”), the Group transacts business in various foreign currencies and is therefore exposed to currency exchange risk. These exposures are managed, to the extent possible, by natural hedges that arise when payments for foreign currency payables are matched against receivables denominated in the same foreign currency or whenever possible, by intragroup arrangements and settlements.

For the USD denominated borrowings, 59% of these are hedged by long dated foreign exchange forward contracts to manage the foreign currency risk (Note 22).

As at 31 December 2012, if RM had weakened/strengthened by 5% against the USD with all other variables held constant, post-tax profit for the financial year would have been RM191.1 million (2011: RM144.9 million) lower/higher, mainly as a result of foreign exchange losses/gains on translation of USD denominated receivables and borrowings (term loan and finance lease). Similarly, the impact on other comprehensive income would have been RM20.0 million (2011: RM23.0 million) higher/lower due to the cash flow hedging in USD. The exposure to other foreign currency risk of the Group is not material and hence, sensitivity analysis is not presented. 273 ad a Berh AirAsi 274 t epor 2012al R Annu

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37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(a) Market risk (continued)

(iii) Foreign currency risk (continued)

The Group’s currency exposure is as follows:

RMB and At 31 December 2012 USD AUD SGD HKD Others RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Receivables 453,959 - - - 146,045 Amounts due from associates 779,306 - - - 1,679 Amount due from a jointly-controlled entity - - 7,699 - - Derivative financialinstruments 37,673 - - - - Deposits, cash and bank balances 203,848 118,736 133,847 452,228 334,521

1,474,786 118,736 141,546 452,228 482,245

Financial liabilities

Trade and other payables 1,131,763 - - - 55,863 Amount due to an associate 29,032 - - - - Borrowings 7,562,154 - 215,163 - 122,536 Derivative financialinstruments 545,627 - - - -

9,268,576 - 215,163 - 178,399

Net exposure (7,793,790) 118,736 (73,617) 452,228 303,846

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(a) Market risk (continued)

(iii) Foreign currency risk (continued) RMB and At 31 December 2011 USD AUD SGD HKD Others RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Receivables 361,610 - - - 67,417 Amounts due from associates 798,586 - - - 4,520 Derivative financialinstruments 52,470 - - - - Deposits, cash and bank balances 216,220 254,833 287,258 295,881 232,090

1,428,886 254,833 287,258 295,881 304,027

Financial liabilities

Trade and other payables 583,942 - - - 27,351 Amounts due to jointly-controlled entities 15,577 - 4,184 - - Amount due to an associate - - 4,444 - - Borrowings 7,137,886 - - - 124,152 Derivative financialinstruments 526,332 - - - -

8,263,737 - 8,628 - 151,503

Net exposure (6,834,851) 254,833 278,630 295,881 152,524

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37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(a) Market risk (continued)

(iii) Foreign currency risk (continued) RMB and At 1 January 2011 USD AUD SGD HKD Others RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Receivables 353,417 - - - 39,533 Amounts due from associates 268,058 - - - 12,292 Derivative financialinstruments 25,544 - - - - Amounts due from a jointly-controlled entity 99,802 - - - - Deposits, cash and bank balances 211,677 118,327 172,680 127,326 89,935

958,498 118,327 172,680 127,326 141,760

Financial liabilities

Trade and other payables 553,608 - - - 15,817 Amount due to an associate - - 5,223 - - Borrowings 7,204,819 - - - 123,725 Derivative financialinstruments 452,865 - - - -

8,211,292 - 5,223 - 139,542

Net exposure (7,252,794) 118,327 167,457 127,326 2,218

The Group’s financial assets and liabilities are significantly denominated in USD. To manage the Group’s foreign exchange risk against its functional currency, the Group entered into forward foreign exchange contracts as disclosed in Note 22 to the financial statements.

(b) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers, cash and cash equivalents and financial assets (derivative instruments).

The Group’s exposure to credit risks or the risk of counterparties defaulting arises mainly from various deposits and bank balances, receivables and derivative financial instruments. As the Group does not hold collateral, the maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet.

Credit risks are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised by monitoring receivables regularly. In addition, credit risks are also controlled as majority of the Group’s deposits and bank balances and derivative financial instruments are placed or transacted with major financial institutions and reputable parties. The Directors are of the view that the possibility of non-performance by the majority of these financial institutions is remote on the basis of their financial strength and support of their respective governments.

The Group generally has no concentration of credit risk arising from trade receivables. 37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(c) Liquidity and cash flow risk

The Group’s policy on liquidity risk management is to maintain sufficient cash and cash equivalents and to have available funding through adequate amounts of committed credit facilities and credit lines for working capital requirements.

The table below analyses the Group’s payables, non-derivative financial liabilities, gross-settled and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.

Less than 1 year 1 – 2 years 2-5 years Over 5 years RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2012

Term loans 936,603 933,049 2,816,548 3,838,064 Finance lease liabilities 103,748 104,279 316,386 572,529 Commodity Murabahah finance 14,353 14,391 43,478 35,350 Sukuk 430,185 - - - Trade and other payables 1,295,065 - - - Amount due to an associate 29,032 - - - Amount due to a related party 12,639 - - -

2,821,625 1,051,719 3,176,412 4,445,943

At 31 December 2011

Term loans 862,058 2,162,282 2,382,489 3,711,096 Finance lease liabilities 123,739 127,968 385,879 935,318 Commodity Murabahah finance 14,286 14,396 43,466 50,112 Sukuk 20,370 430,185 - - Trade and other payables 1,137,232 - - - Amounts due to jointly-controlled entities 19,761 - - - Amount due to an associate 4,444 - - - Amount due to a related party 10,560 - - -

2,192,450 2,734,831 2,811,834 4,696,526

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37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(c) Liquidity and cash flow risk (continued)

Less than 1 year 1 – 2 years 2-5 years Over 5 years RM’000 RM’000 RM’000 RM’000

Group (continued)

At 1 January 2011

Term loans 702,425 712,286 2,954,474 3,659,957 Finance lease liabilities 68,265 72,118 1,028,971 196,720 Commodity Murabahah finance 14,761 14,774 44,266 65,323 Sukuk 20,370 20,370 430,185 - Trade and other payables 912,943 - - - Amount due to an associate 5,223 - - - Amount due to a related party 41,262 - -

1,765,249 819,548 4,457,896 3,922,000

Company

At 31 December 2012

Term loans 936,603 933,049 2,816,548 3,838,064 Finance lease liabilities 103,748 104,279 316,386 572,529 Commodity Murabahah finance 14,353 14,391 43,478 35,350 Sukuk 430,185 - - - Trade and other payables 1,266,924 - - - Amount due to an associate 68,052 - - - Amount due to a related party 12,639 - - -

2,832,504 1,051,719 3,176,412 4,445,943

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(c) Liquidity and cash flow risk (continued)

Less than 1 year 1 – 2 years 2-5 years Over 5 years RM’000 RM’000 RM’000 RM’000

Company (continued)

At 31 December 2011

Term loans 862,058 2,162,282 2,382,489 3,711,096 Finance lease liabilities 123,739 127,968 385,879 935,318 Commodity Murabahah finance 14,286 14,396 43,466 50,112 Sukuk 20,370 430,185 - - Trade and other payables 1,103,063 - - - Amounts due to subsidiaries 5,605 - - - Amounts due to jointly-controlled entities 50,087 - - - Amount due to an associate 4,444 - - - Amount due to a related party 10,560 - - -

2,194,212 2,734,831 2,811,834 4,696,526

At 1 January 2011

Term loans 702,425 712,286 2,954,474 3,659,957 Finance lease liabilities 68,265 72,118 1,028,971 196,720 Commodity Murabahah finance 14,761 14,774 44,266 65,323 Sukuk 20,370 20,370 430,185 - Trade and other payables 884,344 - - - Amount due to a jointly-controlled entity 322,614 - - - Amount due to an associate 5,223 - - - Amount due to a related party 41,262 - - - Amounts due to subsidiaries 44,251 - - -

2,103,515 819,548 4,457,896 3,922,000

279 ad a Berh AirAsi 280 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(c) Liquidity and cash flow risk (continued)

The table below analyses the Group’s and Company’s derivative financial instruments for which contractual maturities are essential for an understanding of the timing of the cash flows into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Less than 1 year 1 – 2 years 2-5 years Over 5 years RM’000 RM’000 RM’000 RM’000

Group and Company

At 31 December 2012 Net-settled derivatives

Trading 29,967 26,642 53,415 15,508 Hedging 96,560 90,421 169,949 15,508

Gross-settled derivatives

Trading – outflow 97,055 94,184 242,657 245,157 Trading – inflow (90,618) (87,932) (226,500) (229,167) Hedging – outflow 121,710 121,455 404,485 438,867 Hedging – inflow (112,424) (112,188) (372,849) (404,578)

At 31 December 2011 Net-settled derivatives

Trading 72,923 81,252 153,028 36,322 Hedging 35,405 31,174 62,873 24,554

Gross-settled derivatives

Trading – outflow 99,933 97,055 258,285 323,713 Trading – inflow (96,671) (93,883) (249,799) (313,387) Hedging – outflow 331,162 332,272 1,004,940 1,464,987 Hedging – inflow (320,469) (322,313) (979,756) (1,434,477) 37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(c) Liquidity and cash flow risk (continued)

Less than 1 year 1 – 2 years 2-5 years Over 5 years RM’000 RM’000 RM’000 RM’000

Group and Company (continued)

At 1 January 2011

Net-settled derivatives

Trading 37,578 31,908 38,525 (891) Hedging 72,865 64,260 75,806 2,892

Gross-settled derivatives

Trading – outflow 10,149 9,649 17,780 - Trading – inflow (9,567) (9,095) (16,670) - Hedging – outflow 366,035 362,625 1,080,724 1,793,982 Hedging – inflow (341,797) (339,837) (1,023,389) (1,700,988)

(d) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to provide returns for shareholders and benefits for other stakeholders.

In order to optimise the capital structure, or the capital allocation amongst the Group’s various businesses, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, take on new debts or sell assets to reduce debt.

The Group’s overall strategy remains unchanged from 2011.

Consistent with others in the industry, the Group monitors capital utilisation on the basis of the gearing ratio. This ratio is calculated as total debts divided by total capital. Total debts are calculated as total borrowings (including “short term and long term borrowings” as shown in the Group’s balance sheet). Total capital is calculated as the sum of ‘equity attributable to equity holders of the Company’ as shown in the balance sheet and total debts.

281 ad a Berh AirAsi 282 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(d) Capital risk management (continued)

The gearing ratio as at 31 December 2012, 31 December 2011 and 1 January 2011 was as follows:

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Total borrowings (Note 29) 8,409,339 7,781,150 7,856,851 Total equity attributable to equity holders of the Company 5,902,099 4,036,397 3,640,960

14,311,438 11,817,547 11,497,811

Gearing ratio 58.8% 65.8% 68.3%

The Group and the Company are in compliance with all externally imposed capital requirements for the financial years ended 31 December 2012 and 31 December 2011.

(e) Fair value measurement

The carrying amounts of cash and cash equivalents, trade and other current assets, and trade and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

Determination of fair value and fair value hierarchy

Effective 1January 2011, the Group adopted the Amendment to FRS 7 for financial instruments that are measured in the statement of financial position at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). 37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(e) Fair value measurement (continued)

The following table presents the Group and Company’s assets and liabilities that are measured at fair value at 31 December 2012, 31 December 2011 and 1 January 2011.

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000

Group

31 December 2012

Assets Financial assets at fair value through profit or loss - Trading derivatives - 3,548 - 3,548 Derivatives used for hedging - 34,125 - 34,125 Available-for-sale financial assets - Equity securities - - 308,792 308,792

- 37,673 308,792 346,465

Liabilities Financial liabilities at fair value through profit or loss - Trading derivatives - 136,861 - 136,861 Derivatives used for hedging - 408,766 - 408,766

- 545,627 - 545,627

Company

31 December 2012

Assets Financial assets at fair value through profit or loss - Trading derivatives - 3,548 - 3,548 Derivatives used for hedging - 34,125 - 34,125 Available-for-sale financial assets - Equity securities - - 295,982 295,982

- 37,673 295,982 333,655

Liabilities Financial liabilities at fair value through profit or loss - Trading derivatives - 136,861 - 136,861 Derivatives used for hedging - 408,766 - 408,766

- 545,627 - 545,627 283 ad a Berh AirAsi 284 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(e) Fair value measurement (continued)

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000

Group and Company

31 December 2011

Assets Financial assets at fair value through profit or loss - Trading derivatives - 12,713 - 12,713 Derivatives used for hedging - 39,757 - 39,757 Available-for-sale financial assets - Equity securities - - 152,942 152,942

- 52,470 152,942 205,412

Liabilities Financial liabilities at fair value through profit or loss - Trading derivatives - 157,125 - 157,125 Derivatives used for hedging - 369,207 - 369,207

- 526,332 - 526,332

As at 1 January 2011

Assets Financial assets at fair value through profit or loss - Trading derivatives - 23,306 - 23,306 Derivatives used for hedging - 2,238 - 2,238 Available-for-sale financial assets - Equity securities - - 152,942 152,942

- 25,544 152,942 178,486

Liabilities Financial liabilities at fair value through profit or loss - Trading derivatives - 108,752 - 108,752 Derivatives used for hedging - 344,113 - 344,113

- 452,865 - 452,865

37 FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED)

(e) Fair value measurement (continued)

Financial instruments are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted prices is readily available, and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an on-going basis. These would include actively traded listed equities and actively exchange-traded derivatives.

Where fair value is determined using unquoted market prices in less active markets or quoted prices for similar assets and liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Group then determines fairvalue based upon valuation techniques that use as inputs, market parameters including but not limited to yield curves, volatilities and foreign exchange rates. The majority of valuation techniques employ only observable market data and so reliability of the fair value measurement is high. These would include certain bonds, government bonds, corporate debt securities, repurchase and reverse purchase agreements, loans, credit derivatives, certain issued notes and the Group’s over the counter (“OTC”) derivatives.

Financial instruments are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs). Such inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the input or other analytical techniques.

This category includes private equity investments, certain OTC derivatives (requiring complex and unobservable inputs such as correlations and long dated volatilities) and certain bonds.

There were no changes in Level 3 instruments for the financial year ended 31 December 2012 for the Group and Company.

38 FINANCIAL INSTRUMENTS

(a) Financial instruments by category

Group

Assets at fair value through Derivatives Loans and the profit used for Available receivables and loss hedging for sale Total RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2012

Assets as per balance sheet Available-for-sale financial assets - - - 308,792 308,792 Trade and other receivables excluding prepayments 650,705 - - - 650,705 Amounts due from associates 780,985 - - - 780,985 Amount due from a jointly-controlled entity 10,765 - - - 10,765 Amount due from a related party 1,282 - - - 1,282 Derivative financial Instruments - 3,548 34,125 - 37,673 Deposits, cash and bank Balances 2,232,731 - - - 2,232,731

Total 3,676,468 3,548 34,125 308,792 4,022,933 285 ad a Berh AirAsi 286 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

38 FINANCIAL INSTRUMENTS (continued)

(a) Financial instruments by category (continued)

Group (continued)

Liabilities Other at fair value financial through Derivatives liabilities at the profit used for amortised and loss hedging cost Total RM’000 RM’000 RM’000 RM’000

31 December 2012

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) - - 7,594,086 7,594,086 Finance lease liabilities - - 815,253 815,253 Derivative financial instruments 136,861 408,766 - 545,627 Trade and other payables - - 1,295,065 1,295,065 Amount due to an associate - - 29,032 29,032 Amount due to a related party - - 12,639 12,639

Total 136,861 408,766 9,746,075 10,291,702

Assets at fair value through Derivatives Loans and the profit used for Available receivables and loss hedging for sale Total RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2011

Assets as per balance sheet Available-for-sale financial assets - - - 152,942 152,942 Trade and other receivables excluding prepayments 637,332 - - - 637,332 Amounts due from associates 803,106 - - - 803,106 Amount due from a jointly-controlled entity 4,526 - - - 4,526 Derivative financial Instruments - 12,713 39,757 - 52,470 Deposits, cash and bank balances 2,105,010 - - - 2,105,010

Total 3,549,974 12,713 39,757 152,942 3,755,386 38 FINANCIAL INSTRUMENTS (continued)

(a) Financial instruments by category (continued)

Group (continued)

Liabilities Other at fair value financial through Derivatives liabilities at the profit used for amortised and loss hedging cost Total RM’000 RM’000 RM’000 RM’000

31 December 2011

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) - - 6,394,068 6,394,068 Finance lease liabilities - - 1,387,082 1,387,082 Derivative financial instruments 157,125 369,207 - 526,332 Trade and other payables - - 1,137,232 1,137,232 Amounts due to jointly controlled entities - - 19,761 19,761 Amount due to an associate - - 4,444 4,444 Amount due to a related party - - 10,560 10,560

Total 157,125 369,207 8,953,147 9,479,479

Assets at fair value through Derivatives Loans and the profit used for Available receivables and loss hedging for sale Total RM’000 RM’000 RM’000 RM’000 RM’000

1 January 2011

Assets as per balance sheet Available for sale financial assets - - - 152,942 152,942 Trade and other receivables excluding prepayments 515,073 - - - 515,073 Amounts due from associates 280,350 - - - 280,350 Amounts due from a jointly controlled entity 99,802 - - - 99,802 Derivative financial instruments - 23,306 2,238 - 25,544 Deposits, cash and bank balances 1,504,617 - - - 1,504,617

Total 2,399,842 23,306 2,238 152,942 2,578,328

287 ad a Berh AirAsi 288 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

38 FINANCIAL INSTRUMENTS (continued)

(a) Financial instruments by category (continued)

Group (continued)

Liabilities Other at fair value financial through Derivatives liabilities at the profit used for amortised and loss hedging cost Total RM’000 RM’000 RM’000 RM’000

1 January 2011

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) - - 6,928,233 6,928,233 Finance lease liabilities - - 928,618 928,618 Derivative financial instruments 108,752 344,113 - 452,865 Trade and other payables - - 912,943 912,943 Amount due to an associate - - 5,223 5,223 Amount due to a related party - - 41,262 41,262 Hire purchase payables - - 15 15

Total 108,752 344,113 8,816,294 9,269,159

(b) Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Counterparties without external credit rating

Group 1 2,693 11,476 15,774 Group 2 93,623 110,335 87,557

Total unimpaired trade receivables 96,316 121,811 103,331 38 FINANCIAL INSTRUMENTS (continued)

(b) Credit quality of financial assets (continued)

Group

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Cash at bank and short-term bank deposits

AAA to A- 1,788,499 1,992,841 1,398,674 BBB to B3 444,232 112,169 105,943

2,232,731 2,105,010 1,504,617

Derivative financial assets

AA+ to A+ 18,744 16,896 23,306 A to BBB- 18,929 35,574 2,238

37,673 52,470 25,544

Loans to related parties

Group 2 780,985 807,632 380,152

Group 1 – New customers/related parties (Less than 6 months) Group 2 – Existing customers/related parties (more than 6 months) with no defaults in the past. Group 3 – Existing customers/related parties (more than 6 months) with some defaults in the past.

All defaults were fully recovered.

All other receivables and deposits are substantially with existing counterparties with no history of default.

289 ad a Berh AirAsi 290 t epor 2012al R Annu

reports and financial statements Notes to the Financial Statements 31 December 2012

39 RECLASSIFICATION OF COMPARATIVES

In conjunction with the adoption of MFRS, a review of asset and liability classification was also undertaken. Arising from the review, deposits on aircraft purchase have been reclassified to non-current assets.

Deposits on aircraft purchases which were previously classified based on the period in which the deposits were to be utilised have now been re-classified to non-current assets to be consistent with the underlying assets to which they relate.

The effects of the changes on the Group’s financial statements are as follows:

Group and Company

At 1 January 2011

As previously As reported Effects of restated 1.1.2011* reclassification 1.1.2011* RM’000 RM’000 RM’000

Balance sheet

Non-current assets

Deposits on aircraft purchase - 248,684 248,684

Current assets

Deposits on aircraft purchase 248,684 (248,684) -

Group and Company

At 31 December 2011

As previously Effects of As reported reclassification restated RM’000 RM’000 RM’000

Balance sheet

Non-current assets

Deposits on aircraft purchase 112,228 255,540 367,768

Current assets

Deposits on aircraft purchase 255,540 (255,540) -

* Also represents balances as at 31 December 2010.

40 SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES LISTING REQUIREMENT

The following analysis of realised and unrealised retained profits at the legal entity level is prepared in accordance with the Guidance on Special Matter No.1 – Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. This disclosure is based on the format prescribed by Bursa Malaysia Securities Berhad.

Group Company

2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Total retained earnings of AirAsia Berhad and its subsidiaries: - Realised 2,196,856 1,781,491 2,175,079 1,769,575 - Unrealised 2,087,864 809,277 927,725 809,328

4,284,720 2,590,768 3,102,804 2,578,903

Total share of accumulated losses from associated companies: - Realised (8,436) (9,764) - -

Total share of accumulated losses from jointly controlled entities - Realised (2,973) (74) - -

Total retained earnings as per consolidated financial statements 4,273,311 2,580,930 3,102,804 2,578,903

The disclosure of realised and unrealised profits above is solely for compliance with the directive issued by the Bursa Malaysia Securities Berhad and should not be applied for any other purposes.

291 ad a Berh AirAsi 292 t epor 2012al R Annu

reports and financial statements Statement by Directors Pursuant to Section 169(15) of the Companies Act, 1965

We, Tan Sri Dr Anthony Francis Fernandes and Aireen Omar, being two of the Directors of AirAsia Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 198 to 291 are drawn up so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2012 and of the results and the cash flows of the Group and Company for the financial year ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965.

The information set out in Note 40 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

In accordance with a resolution of the Board of Directors dated 29 April 2013.

TAN SRI DR. ANTHONY FRANCIS FERNANDES AIREEN OMAR DIRECTOR DIRECTOR reports and financial statements Statutory Declaration Pursuant to Section 169(16) Of The Companies Act, 1965

I, Andrew Littledale, the Officer primarily responsible for the financial management of AirAsia Berhad, do solemnly and sincerely declare that the financial statements set out on pages 198 to 291 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

ANDREW LITTLEDALE

Subscribed and solemnly declared by the abovenamed Andrew Littledale at Petaling Jaya in Malaysia on 29 April 2013, before me.

COMMISSIONER FOR OATHS

293 ad a Berh AirAsi 294 t epor 2012al R Annu

reports and financial statements Independent Auditors’ Report To the Members of AirAsia Berhad (Incorporated in Malaysia) (Company No. 284669 W)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of AirAsia Berhad on pages 198 to 291, which comprise the balance sheets as at 31 December 2012 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out in Notes 1 to 39.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows for the financial year then ended. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 13 to the financial statements. c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 40 on page 291 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysia Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS IRVIN GEORGE LUIS MENEZES (No. AF: 1146) (No. 2932/06/14 (J)) Chartered Accountants Chartered Accountant

Kuala Lumpur 29 April 2013

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other information Analysis Of Shareholdings as at 16 April 2013

DISTRIBUTION OF SHAREHOLDINGS

Class of shares : Ordinary shares of RM0.10 each (“Shares”) Voting rights : One vote per ordinary share

Shareholdings No. of % of No. of % of Issued Shareholders Shareholders Shares Share Capital

Less than 100 103 0.51 1,614 0.00 100 – 1,000 6,546 32.45 5,701,635 0.21 1,001 – 10,000 11,100 55.02 45,264,191 1.63 10,001 – 100,000 1,818 9.01 54,551,817 1.96 100,001 to less than 5% of issued shares 605 3.00 2,077,608,243 74.72 5% and above of issued shares 3 0.01 597,379,080 21.48

20,175 100.00 2,780,506,580 100.00

SUBSTANTIAL SHAREHOLDERS

The direct and indirect shareholdings of the shareholders holding more than 5% in AirAsia Berhad based on the Register of Substantial Shareholders are as follows:-

DIRECT INDIRECT

Name No. of % of No. of % of Shares Held Issued Shares Shares Held Issued Shares

Tune Air Sdn Bhd (“TASB”) 640,608,382 (1) 23.04 - - Tan Sri Dr Anthony Francis Fernandes 3,227,010 (2) 0.12 640,608,382 (3) 23.04 Dato’ Kamarudin bin Meranun 1,692,900 0.06 640,608,382 (3) 23.04 Employees Provident Fund Board 204,734,200 (4) 7.36 4,809,100 (5) 0.17 Wellington Management Company, LLP 250,338,371 (6) 9.00 - -

NOTES: (1) Shares held under ECML Nominees (Tempatan) Sdn. Bhd., Cimsec Nominees (Tempatan) Sdn Bhd, Maybank Nominees (Tempatan) Sdn. Bhd., HSBC Nominees (Tempatan) Sdn. Bhd. and Citigroup Nominees (Tempatan) Sdn. Bhd. (2) Shares held under own name (600,000 shares) and Cimsec Nominees (Tempatan) Sdn. Bhd. (2,627,010 shares) (3) Deemed interested by virtue of Section 6A of the Companies Act, 1965 (“the Act”) through a shareholding of more than 15% in TASB. (4) Shares held under own name (1,500,000 shares) and Citigroup Nominees (Tempatan) Sdn. Bhd. (203,234,200 shares) (5) Shares held under Citigroup Nominees (Tempatan) Sdn. Bhd. (6) Shares held under Cartaban Nominees (Asing) Sdn. Bhd., Citigroup Nominees (Asing) Sdn. Bhd., HSBC Nominees (Asing) Sdn. Bhd., JP Morgan Chase Bank N.A., Master Trust Bank of Japan Ltd., Mellon Bank N.A., RBC Dexia Investor Services and Danske Bank A/S.

DIRECTORS’ SHAREHOLDINGS

The interests of the Directors of AirAsia in the Shares and options over shares in the Company and its related corporations based on the Company’s Register of Directors’ Shareholdings are as follows:-

DIRECT INDIRECT

Name No. of % of No. of % of Shares Held Issued Shares Shares Held Issued Shares

Tan Sri Dr Anthony Francis Fernandes 3,227,010 (1) 0.12 640,608,382 (2) 23.04 Dato’ Kamarudin bin Meranun 2,292,900 0.08 640,608,382 (2) 23.04 Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar 200,000 (3) 0.01 - - Conor Mc Carthy 9,100,000 (4) 0.33 - - Dato’ Leong Sonny @ Leong Khee Seong 100,000 -* - - Dato’ Fam Lee Ee 50,000 -* - - Dato’ Mohamed Khadar bin Merican - - - - Datuk Mohd Omar bin Mustapha - - - - Aireen Omar - - - -

NOTES: * Negligible. (1) Shares held under own name (600,000 shares) and Cimsec Nominees (Tempatan) Sdn. Bhd. (2,627,010 shares) (2) Deemed interested by virtue of Section 6A of the Act through a shareholding of more than 15% in TASB. (3) Shares held under Cimsec Nominees (Tempatan) Sdn. Bhd. (4) Shares held under own name (100,000 shares) and HSBC Nominees (Asing) Sdn Bhd - Exempt AN for Credit Suisse (SG BR-TST-Asing) (9,000,000 shares)

The breakdown of the options offered to and exercised by, or shares granted to and vested in non-executive director pursuant to the Company’s Employee Share Option Scheme (“ESOS”) in respect of the financial year is as follows:

Amount of Amount of options options granted exercised

Dato’ Kamarudin bin Meranun 600,000 600,000

# The options held over ordinary shares in the Company were granted on 1 September 2004 pursuant to the ESOS approved by the shareholders on 7 June 2004. On 28 May 2009, the Company extended the duration of its ESOS which expired on 6 June 2009 for 5 years to 6 June 2014. This was in accordance with the terms of the ESOS By-Laws. The ESOS extension was not subject to any regulatory or shareholders approval.

None of the Directors have any interests in the shares or options of the subsidiaries of the Company other than as disclosed above. 297 ad a Berh AirAsi 298 t epor 2012al R Annu

other information List of Top 30 Shareholders as at 16 April 2013

Name of Shareholders No. of % of Issued Shares Held share Capital

1. HSBC Nominees (Tempatan) Sdn. Bhd. 226,456,587 8.14 Credit Suisse HK for Tune Air Sdn. Bhd.

2. Citigroup Nominees (Tempatan) Sdn. Bhd. 203,234,200 7.31 Employees Provident Fund Board

3. Tune Air Sdn Bhd 167,688,293 6.03

4. HSBC Nominees (Asing) Sdn. Bhd. 120,175,500 4.32 TNTC for The Nomad Investment Partnership LP Cayman

5. HSBC Nominees (Asing) Sdn. Bhd. 119,582,381 4.30 BBH (LUX) SCA for Genesis Smaller Companies

6. HSBC Nominees (Asing) Sdn. Bhd. 99,844,770 3.59 Exempt An for JPMorgan Chase Bank, National Association (U.S.A.)

7. Amanahraya Trustees Berhad 95,901,400 3.45 Skim Amanah Saham Bumiputera

8. CIMSEC Nominees (Tempatan) Sdn. Bhd. 86,039,161 3.09 Pledged Securities Account for Tune Air Sdn. Bhd. (EDG&GCM)

9. Cartaban Nominees (Asing) Sdn. Bhd. 66,490,000 2.39 SSBT Fund HG22 for Smallcap World Fund, Inc.

10. Valuecap Sdn. Bhd. 64,800,000 2.33

11. Cartaban Nominees (Asing) Sdn. Bhd. 62,860,000 2.26 SSBT Fund HG05 for the New Economy Fund

12. HSBC Nominees (Asing) Sdn. Bhd. 61,505,000 2.21 NTGS LDN for Skagen Kon-Tiki Verdipapirfond

13. CIMB Group Nominees (Tempatan) Sdn. Bhd. 59,052,800 2.12 CIMB Bank Berhad (EDP 2)

14. Cartaban Nominees (Asing) Sdn. Bhd. 50,342,700 1.81 Exempt An for State Street Bank & Trust Company (West CLT OD67)

15. Citigroup Nominees (Tempatan) Sdn. Bhd. 49,500,000 1.78 Pledged Securities Account – Bank Julius Baer & Co Ltd for Tune Air Sdn Bhd (CB SG) Name of Shareholders No. of % of Issued Shares Held share Capital

16. Maybank Nominees (Tempatan) Sdn. Bhd. 48,389,700 1.74 Maybank Trustees Berhad for Public Ittikal Fund (N14011970240)

17. HSBC Nominees (Asing) Sdn. Bhd. 42,234,248 1.52 BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund

18. HSBC Nominees (Asing) Sdn. Bhd. 41,843,797 1.50 Exempt An for The Bank of New York Mellon (Mellon Acct)

19. Maybank Nominees (Tempatan) Sdn. Bhd. 39,710,000 1.43 Kuwait Finance House (Malaysia) Berhad for Tune Air Sdn. Bhd. (Tony Fernandes)

20. ECML Nominees (Tempatan) Sdn. Bhd. 36,995,832 1.33 Pledged Securities Account for Tune Air Sdn. Bhd. (001)

21. HSBC Nominees (Asing) Sdn. Bhd. 34,597,300 1.24 Exempt An for JPMorgan Chase Bank, National Association (Norges Bk Lend)

22. ECML Nominees (Tempatan) Sdn. Bhd. 22,818,138 0.82 Pledged Securities Account for Tune Air Sdn. Bhd. (001)

23. Cartaban Nominees (Asing) Sdn. Bhd. 22,400,000 0.81 SSBT Fund HG19 for Global Small Capitalization (AM Funds INSSR)

24. Maybank Nominees (Tempatan) Sdn. Bhd. 20,750,700 0.75 Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100)

25. HSBC Nominees (Asing) Sdn. Bhd. 20,154,642 0.72 Exempt An for JPMorgan Chase Bank, National Association (U.K.)

26. HSBC Nominees (Asing) Sdn. Bhd. 18,116,700 0.65 Exempt An for JPMorgan Chase Bank, National Association (Rep. of China)

27. Cartaban Nominees (Asing) Sdn. Bhd. 16,880,000 0.61 SSBT Fund Y72J for Litman Gregory Masters International Fund

28. HSBC Nominees (Asing) Sdn. Bhd. 16,203,900 0.58 Exempt An For Morgan Stanley & Co. LLC (Client)

29. Cartaban Nominees (Asing) Sdn. Bhd. 15,526,289 0.56 SSBT Fund NB37 for Janus Contrarian Fund

30. HSBC Nominees (Asing) Sdn. Bhd. 14,914,843 0.54 Exempt An for JPMorgan Chase Bank, National Association (Saudi Arabia)

299 ad a Berh AirAsi 300 t epor 2012al R Annu

other information List of Properties Held

Audited net book Postal address/ Description/ Tenure/ date of Approximate age value as at 31 Owner of building location of existing use of Build-up area expiry of lease of building December 2012 building building (RM’000)

AirAsia Berhad Taxiway Charlie, Non permanent See note 2 2,400 sqm 9 years and 5 1,722 KLIA(part of PT39 structure/aircraft months KLIA, Sepang) maintenance See note 1 hangar

AirAsia Berhad AirAsia Academy, AirAsia Simulator 30 years from 20 4,997 sqm 8 years 9,877 Lot PT25B, Complex September 2004 Southern Support to 19 September Zone, KLIA 64000 2034 Sepang, Selangor

AirAsia Berhad AirAsia Academy, AirAsia Academy, 30 years from 1 6,225 sqm 5 years 22,982 Lot PT25B, Engineering and May 2007 to 30 Academy 5,255 Southern Support In Flight April 2037 sqm Engineering/ Zone, KLIA 64000 Warehouse In-Flight Sepang, Selangor Warehouse

Notes:

(1) On the fitness of occupation of the hangar, it is the subject of a year-to-year “Kelulusan Permit Bangunan Sementara” issued by the Majlis Daerah Sepang. The permit has been renewed and will expire on 31 December 2013. (2) The land area occupied is approximately 2,400 square meters. The land is owned by Malaysia Airports (Sepang) Sdn. Bhd. (“MAB”) and the Company has an automatic renewal of tenancy on a month to month basis. Revaluation of properties has not been carried out on any of the above properties to date other information Group Directory

brunei CHengdU Jl. Boulevard Ruko Ruby No. R28 malaysia Century Holiday International Panakukkang Mas jOHOr darussalam Travel (ChengDu) CO.LTD Bandar Seri Tune Hotels.com Danga Bay No. 172 Binjang East Road ManadO Lot PTB 22819, Jalan Skudai Begawan Jinjang District Sam Ratulangi International Airport Mukim Bandar, 80200 Johor Bahru Unit No.110 Ground Floor Jalan A.A. Maramis, Manado 95374 Bangunan Kambang Pasang Jln Gadong BSB, BE4119 indonesia GL 13 Senai International Airport Banda aCeH Medan 81250 Johor Bahru Bandara Sultan Iskandar Bandara PoloniaTerminal, Cambodia Muda, Blang Bintang, Aceh Keberangkatan Internasional, No. 26 Jalan Meriam PHnOM PenH Medan 20157 Sumatra 84000 Muar, Johor Bahru Phnom Penh Airport Office, 17 denPaSar, BaLi Mezzanine Floor of Arrival Domestic Bandara I Gusti Ngurah Rai Garuda Plaza Hotel, Jl. No 7, Jalan Bestari 1/5 Terminal, Phnom Penh Airport Terminal Keberangkatan International Sisingamangaraja, No.18 Medan-20213 Taman Nusa Bestari, Bali 80361 79100 Bandar Nusajaya 179, Street Sisowath Padang Johor Bahru Sangkat, Phsar Kandal 1 Jl. Legian Kaja no. 455 Kuta Minangkabau International Airport Khan Daun Penh 12204 Padang, West Sumatra KedaH BandUng Lot 20, Lapangan Terbang China Ruangan Nombor 34 PaLeMBang Sultan Abdul Halim MaCaU Bandara Husein Sastranegara Sultan Mahmud Badaruddin II 06200 Kepala Batas, Alor Star Office 20, Mezzanine Level Jalan Pajajaran No 156 Bandung Airport Palembang, South Sumatra Passenger Terminal Jawa Barat Langkawi International Airport Macau International Airport Taipa PeKanBarU 07100 Padang Mat Sirat, Langkawi Lobby Grand Serela Hotel Sultan Syarif Kasim II, gUang dOng Jl. L.L. R.E Martadinata (Riau) International Airport No. 68-B Ground Floor Century Holiday International No 56, Telp. (022) 426 1636 Jalan Perhubungan Udara Simpang Jalan Ibrahim, 08000 Sungai Petani Travel Service (Shenzhen) Co.Ltd. Tiga, Pekanbaru, Sumatra XY-10 Junting Hotel jaKarTa KUaLa LUMPUr 3085 Eastern Road, Luo Hu Terminal 3, Departure Hall Airlines SOLO Lot 4, Level 2 Shenzhen Offices, Soekarno-Hatta International Adi Soemarmo International Stesen Sentral, KL, 50470 Airport, Cengkareng Airport, Solo, Central Java Century Holiday International Lot G027B, Ground Floor Travel Service (Guang Zhou) Co Ltd. Jl. Boulevard Raya, Blok LA 4 SUraBaYa Podium Block, Plaza Berjaya First Floor, No 8 Zhong Shan No. 10 Kelapa Gading, Jakarta Utara Lobby International Terminal 12 Jalan Imbi, 55100 KL 3 Road, Guang Zhou Juanda International Airport Komp Rukan Dharmawangsa Jalan Raya Juanda Surabaya No 71 Jalan Metro Perdana Barat Zhuhai Sun Star International Jl. Dharmawangsa VI No.43 Jawa Timur 1 Taman Usahawan Kepong Travel Agency Co Ltd., 1151 Jakarta Selatan 52100 KL South of Yingbin Road, Zhuhai Grand Circle Tunjungan Plaza Sarinah Plaza Jl. Mh Thamrin, 3 Lantai 1, (Lobby Condominium Lot UG-003, UG-003A & UG0038 Beijing No. 11 (LG level) Jakarta Pusat Regency), Jln. Basuki Rahmat 8-12 Upper Ground Floor Century Holiday International Plaza Low Yat, 7 Jalan 1/77 Travel Service (Beijing) Co Ltd. MaKaSSar YOgYaKarTa 55100 KL No 163A Floor Of Yi No 6 Departure Terminal, Sultan Adisutjipto Int. Airport, Jln. Chaowai Street Of Chao Yang District Hasanuddin, International Airport Solo km.9, Yogyakarta, 55282 100022 Beijing Makassar, South Sulawesi Melia Purosani Hotel, Jl Suryotomo No.31, Yogyakarta 301 ad a Berh AirAsi 302 t epor 2012al R Annu

other information Group Directory

KeLanTan TB228, Lot 5, Ground Floor Lot 6813, Ground Floor Synergy philippines Lapangan Terbang Sultan Ismail Istana Monaco, Jalan Bunga Square, (Matang Jaya Commercial CLarK Petra, 16100 Pengkalan Chepa Fajar Complex 91000 Tawau Centre), Jalan Matang Jaya Diosdado Macapagal Kota Bharu 93050 Kuching International Airport Clark Civil Lot G24, Ground Floor Aviation Complex Clark Freeport 3183G, Jalan Sultan Ibrahim Wisma Sabah, Jln. Tun Razak SeLangOr Zone, 2023 (Opp. KB Mall), 15050 Kota Bharu 88000 Kota Kinabalu Ground Floor, Terminal 3 Sultan Abdul Aziz Shah Airport ManiLa PeraK Ground Floor, Terminal 2 47200 Subang Wintrex Travel Corporation Tune Hotel, No.2, Ground Floor Kota Kinabalu Int. Airport Unit 108 SM City North Edsa – The Host, Jalan Veerasamy Old Airport Road,Tanjung Aru Jalan KLIA S3 The Block SM City Complex 30000 Ipoh 88100 Kota Kinabalu Southern Support Zone North Edsa, Pag-Asa 1 Kuala Lumpur International Airport Quezon City TerengganU Lot G67, Ground Floor 64000 Sepang Level 1, Terminal Building Oneplace Mall, Putatan Wintrex Travel Corporation Sultan Mahmud Airport 88200 Kota Kinabalu, Sabah Lot-35 Mydin Mall USJ 1, Subang Unit 126 South Parking Building 21300 Kuala Terengganu SM Mall of Asia Complex SarawaK B-G-3A, IOI Boulevard J.W Diokno Boulevard, Pasay City LaBUan GL02, Ground Floor Jalan Kenari 5, Bandar Puchong Jaya Level 1, Labuan Airport Terminal Bintulu Airport, 97000 Bintulu 47170 Puchong davaO 87008 Wilayah Persekutuan 4th Level, Gaisano Mall of Davao Ground Floor, Miri Airport Lot S141, 2nd Floor J.P Laurel Avenue, Bajada MeLaKa 98000 Miri Plaza Metro Kajang, Section 7 Davao City No 32, Jalan Melaka Raya Jalan Tun Abdul Aziz, 43000 Kajang 23, Taman Melaka Raya Lot 946, Jalan Parry, 98000 Miri 75000 Melaka No 1, Jln PJS 3/48 singapore Row: 13 & 14, Departure Level 2 Departure Level Taman Sri Manja, 46000 Petaling Jaya Singapore Changi Airport Penang Kuching International Airport Terminal 1 Penang International Airport 93756 Kuching No 10, Jalan Bandar Rawang 11 11900 Bayan Lepas Bandar Baru Rawang Wisma Ho Ho Lim, 291 Sub 48000 Rawang sri lanKa Ground Floor, Kim Mansion 332 Lot 4, Ground Floor, Jalan Abell COLOMBO Chulia Street, 10200 93100 Kuching No 2, Jalan Dagang SB 4/2 Setmil Aviation (Pvt) Ltd. Taman Sungai Besi Indah Ground Floor, Setmil Maritime Centre No 723 L-G, Jln Sungai Dua GFLO1, Departure Area 43300 Seri Kembangan 256, Srimath Ramanathan Mawatha 11700 Ground Floor, Sibu Airport Colombo 15 96000 Sibu myanmar A-G-07, Jalan Todak 4 YangOn thailand Sunway Business Park Ground Floor, No. 36 Jalan Keranji Yangon International Airport BangKOK 13700 Seberang Perai 96000 Sibu 127 Tanao Road, Phra Nakorn Office Unit# 01-L Bangkok 10200 SaBaH Grd Flr, Lot 4034 Parkroyal Yangon Lot 1 & 2, 1st Floor Jln Tun Ahmad Zaidi Suvarnabhumi International Airport Terminal Building Parkcity Commercial Sq, mandalay Room A1-062 Ground Floor Sandakan Airport, 90719 Sandakan Phase 5, 97000 Bintulu Room 3, 26th (B) Road Concourse A, Bangna-Trad Road between 78th and 79th Road Racha Teva, Bang Pli FL4, 1st Floor, Tawau Airport SL11 Ground Floor, Lot 2541 Samutprakarn 10540 Building, Jalan Apas-Balung Lee Ling Heights Phase 2, Mile 6.5 91100 Tawau Jalan Penrissen, P.O. Box 2044 93250 Kuching Tesco Lotus – Bangkapi naraTHiwaT Call Centre numbers 2nd Floor, 3109 Ladpro Road Narathiwat Airport Bangkapi, 10240 330 Moo 5, Tambol Kok-Kian australia 1300 760 330 Amphur Muang, 96000 Tesco Lotus – Rama1 China +86 20 2281 7666 3rd Floor, 831 Rama 1 Road PHUKeT india 1860 500 8000 Wangmai, Pathumwan Phuket International Airport 10330 312, 3rd Floor, Tumbol Maikao indonesia +62 21 2927 0999 Amphur Thalang, 83110 Tesco Lotus – Rangsit, 2nd Floor Japan 0120 963 516 392/4, Moo2, Phaholyothin Road Unit 9, Laflora Patong Area Jeddah +966 8008449458 Thanyaburi, Pathumthani, 12130 No. 39, 39/1, Thaveewong Rd. +966 8008500001 Patong, Kratoo (For Guests using Zain as their Tesco Lotus - Sukhumvit 50 Telco service provider) 1st floor, 1710, Sukhumvit Road Tesco Lotus – Phuket Klong Toey, 10110 2nd Floor, 104, Chalermprakiat Road hong Kong +852 3112 3222 Rasada Sub District Tesco Lotus - Lad Prao maCau 0800912 Muang District, 83000 2nd Floor, 1190, Phahonyothin Road malaysia 600 85 8888 Jompol, Jatujak, 1090 SUraT THani (AirAsia X Premium Line) Surat Thani International Airport chargeable at RM1.95 per minute CHiang Mai 73 Moo 3 Tambol Huatuey Chiangmai International Airport philippines +63 2 588 9999 Amphur Punpin 60, 1st Floor, Tambol Sutep Amphur Muang, 50200 singpore +65 6307 7688 UBOn raTCHaTHani (AirAsia X Premium Line) 416 Thaphae Road Ubon Ratchathani Airport 297 Ubon Ratchathani Airport south Korea 00798 1420 69940 Thepyotee Road Tesco Lotus - Chiang Mai taiwan 008 0185 3031 Kamtieng, 2nd Floor Amphur Nai Muang, 34000 19, Kamtieng Road, Patan Sub District thailand +66 2 515 9999 Muang District, 50340 UdOn THani Udon Thani International Airport CHiang rai 224 Moo 1, Tambol Makkhang Chiang Rai International Airport Amphur Muang, 41000 2305/2 404 Moo 10, Tambol Bandu Amphur Muang, Chiang Rai 57100 Pattaya Tesco Lotus South Pattaya HaT Yai 2nd Floor 408/2 Moo 12 Hat Yai International Airport South Pattaya, Sukhumvit Road 125 Hadyai International Airport Nongprue, Banglamung Moo 3 Klongla, Klonghoikong Chonburi 20150 Songkhla 90115 Vietnam Tesco Lotus - Hat Yai, 1st Floor HanOi 1142, Kanchanawit Road, Hat Yai Lobby A,3rd floor Songkla, 90115 Noi Bai International Airport

KraBi HO CHi MinH 133 Moo 5 Petchkasem Road Room # 1.4.19 Tambol Nuakrong, Amphur Tan Son Nhat International Airport Nuakrong, 81130 303 ad a Berh AirAsi 304 t epor 2012al R Annu

other information Glossary

AirAsia Berhad “The Company” or “AirAsia”.

Aircraft at end of period Number of aircraft owned or on lease arrangements of over one month’s duration at the end of the period.

Aircraft utilisation Average number of block hours per day per aircraft operated.

Available seat Kilometres (AsK) Total seats flown multiplied by the number of kilometres flown.

Average fare Passenger seat sales, surcharges and fees divided by number of passengers.

Block hours Hours of service for aircraft, measured from the time that the aircraft leaves the terminal at the departure airport to the time that it arrives at the terminal at the destination airport.

Capacity The number of seats flown.

Cost per AsK (CASK) Revenue less operating profit divided by available seat kilometres.

Cost per AsK, excluding fuel Revenue less operating profit and aircraft fuel expenses, divided by available seat kilometres. (CASK ex fuel)

Load factor Number of passengers as a percentage of capacity.

Passengers carried Number of earned seats flown. Earned seats comprises seats sold to passengers (including no-shows), seats provided for promotional purposes and seats provided to staff for business travel.

Revenue per AsK (RAsK) Revenue divided by available seat kilometres.

Revenue Passenger Kilometres (RPK) Number of passengers multiplied by the number of kilometres those passengers have flown.

Stage A one-way revenue flight.

Form of Proxy

I/We ______NRIC No./Co No.: ______(FULL NAME IN BLOCK LETTERS) (COMPULSORY) of ______being a (ADDRESS) member of AIRASIA BERHAD (“the Company”) hereby appoint ______(FULL NAME IN BLOCK LETTERS) AIRASIA BERHAD (Company No.: 284669-W) NRIC No.: ______of ______Incorporated in Malaysia (COMPULSORY) (ADDRESS) and/or ______NRIC No. ______(FULL NAME IN BLOCK LETTERS) (COMPULSORY) of ______(ADDRESS) as my / our proxy(ies) to vote in my / our name and on my / our behalf at the Twentieth Annual General Meeting of the Company to be held on Tuesday, 4 June 2013 at 10.00 a.m. and at any adjournment of such meeting and to vote as indicated below:

Resolutions Description FOR AGAINST

Ordinary Ordinary Business No. 1 Receive the Audited Financial Statements and Reports No. 2 Declaration of Final Single Tier Dividend No. 3 Approval of Directors’ Fees No. 4 Re-election of Dato’ Mohamed Khadar Bin Merican No. 5 Re-election of Dato’ Fam Lee Ee No. 6 Proposal for Dato’ Fam Lee Ee to be retained as Independent Non-Executive Director of the Company No. 7 Re-election of Cik Aireen Omar No. 8 Re-appointment of Auditors Special Business No. 9 Authority to allot shares pursuant to Section 132D of the Companies Act, 1965 No. 10 Proposed renewal of existing shareholders’ mandate and new shareholders’ mandate for recurrent related party transactions

(Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting as he thinks fit)

No. of shares held:

CDS Account No.:

The proportion of my/our holding to be represented First Proxy : ______% by my/our proxies are as follows: Second Proxy : ______% ______Date: Signature of Shareholder/Common Seal

Notes to Form of Proxy c. A member entitled to attend and vote is entitled to appoint a proxy (or in the case of a a. Pursuant to the Securities Industry (Central Depositories) (Foreign Ownership) corporation, to appoint a representative), to attend and vote in his stead. There shall be Regulations 1996 and Article 43(1) of the Company’s Articles of Association, only those no restriction as to the qualification of the proxy(ies). Foreigners (as defined in the Articles) who hold shares up to the current prescribed d. The Proxy Form in the case of an individual shall be signed by the appointor or his foreign ownership limit of 45.0% of the total issued and paid-up capital, on a first-in-time attorney, and in the case of a corporation, either under its common seal or under the basis based on the Record of Depositors to be used for the forthcoming Annual General hand of an officer or attorney duly authorised. Meeting, shall be entitled to vote. A proxy appointed by a Foreigner not entitled to e. Where a member appoints two proxies, the appointment shall be invalid unless he vote, will similarly not be entitled to vote. Consequently, all such disenfranchised voting specifies the proportion of his shareholdings to be represented by each proxy. rights shall be automatically vested in the Chairman of the forthcoming Annual General f. Where a Member of the Company is an exempt authorised nominee which holds Meeting. ordinary shares in the Company for multiple beneficial owners in one securities account b. A member must be registered in the Record of Depositors at 5.00 p.m. on 28 May 2013 (“omnibus account”), there is no limit to the number of proxies which the exempt (“General Meeting Record of Depositors”) in order to attend and vote at the Meeting. A authorised nominee may appoint in respect of each omnibus account it holds. depositor shall not be regarded as a Member entitled to attend the Meeting and to speak g. The Proxy Form or other instruments of appointment shall not be treated as valid unless and vote thereat unless his name appears in the General Meeting Record of Depositors. deposited at the Registered Office of the Company at B-13-15, Level 13, Menara Prima Any changes in the entries on the Record of Depositors after the abovementioned date Tower B, Jalan PJU 1/39, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, and time shall be disregarded in determining the rights of any person to attend and vote Malaysia not less than forty-eight (48) hours before the time set for holding the meeting. at the Meeting. Faxed copies of the duly executed form of proxy are not acceptable. Fold here

stamp

Company Secretary AirAsia Berhad (Company No. 2844669-W) B-13-15, Level 13, Menara Prima Tower B Jalan PJU 1/39, Dataran Prima 47301 Petaling Jaya Selangor Darul Ehsan Malaysia

Fold here